Published: Wed, May 16, 2018
Money | By Armando Alvarado

Boeing calls WTO ruling against EU's Airbus subsidy "landmark decision"

Boeing calls WTO ruling against EU's Airbus subsidy

The final decision affirmed a 2016 finding that the European Union had failed to eliminate unfair subsidies for two Airbus twin-aisle models, ending a long-running trade case.

The litigation adds to the tension between the U.S. and Europe, two once-cooperative trade partners that are already sparring over U.S. President Donald Trump's steel and aluminum tariffs and his decision to back out of a nuclear treaty with Iran, jeopardizing $40 billion in aircraft sales.

The WTO appellate body upheld the compliance panel's finding in 2016 that Airbus paid a lower interest rate on financing for the development of its latest aircraft, the A350, than it would have obtained on the commercial market, and that this below-cost financing provided by the French, German, Spanish and United Kingdom governments provided a benefit to Airbus that constituted subsidies.

But the WTO still has to make a final ruling on separate allegations from the European Union that Boeing was provided illegal subsidies from the USA government.

However, the Geneva watchdog dismissed US claims that loans for Airbus's most popular models, the A320 and A330, were costing Boeing significant sales and in so doing narrowed the scope of one of the world's longest and costliest trade spats.

The United States has accused European governments of providing favorable loans to Airbus for its A380 superjumbo and the A350 long-range jet that compete with Boeing's 747 jumbo jet and 787 Dreamliner, respectively.

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Boeing chairman and chief executive officer (CEO) Dennis Muilenburg said yesterday: "Today's final ruling sends a clear message: disregard for the rules and illegal subsidies is not tolerated".

Airbus shares fell shortly after the WTO issued its findings and were poised to close down around 0.86 per cent.

Boeing predicted such tariffs could reach billions of dollars a year starting as early as 2019.

The WTP decision affirmed a ruling that France, Germany, Spain and the United Kingdom have failed to adequately remedy market-distorting aid for the launch of Airbus's A380 superjumbo, infrastructure support and equity investments that unfairly benefited the plane-maker. Boeing fell less than 1 percent to $342.09 at 12:37 p.m.in NY, recovering from losses logged before the decision was issued.

The WTO decision on the latest in a string of tussles between Europe's Airbus and USA rival Boeing comes as the Trump administration has exerted intense pressure on the Geneva-based organisation over what the president alleges is its "unfair" treatment of the United States.

"The Airbus case against Boeing is yet to come".

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