IN FOCUS: Boeing insists ‘illegal’ A350 launch aid still flowing to Airbus

London
Source:
This story is sourced from Pro
See more Pro news »

The long-running Airbus versus Boeing transatlantic trade war over government subsidies for airliner development has flared up again, with Boeing proclaiming US compliance with a March 2012 World Trade Organisation ruling to redress "relatively small" subsidy infractions - of $5.3 billion or more, ranging from NASA and defence department research grants to Washington state government tax breaks - while redoubling its insistence that Airbus has continued to "thumb its nose at the WTO".

Speaking for the Airbus side of the dispute - technically a pair of counterclaims before the WTO by the USA and European Union going back to 2004 - EU trade spokesperson John Clancy countered: "We will now immediately review their compliance package to check whether the US have taken the necessary steps to end these subsidies and their adverse effects."

According to Boeing, US government action has addressed subsidies that the WTO in March identified as inconsistent with its rules.

"Unfortunately," Boeing continued, "the same cannot be said of Airbus and its government sponsors, which have thumbed their noses at the WTO. Despite a crystal clear ruling against launch aid subsidies, European governments have continued the practice by providing Airbus with billions of taxpayer euros and pounds for its next new product, the A350. What is more, the European governments have yet to remove the very substantial subsidies, including those propping up the A380, which the WTO's ruling in June of last year requires them to do.

"The illegal subsidies to Airbus, most importantly the pernicious, market distorting practice of launch aid, must stop. The US government remains committed to ending these subsidies, and Boeing fully supports the actions the US government has taken to ending them."

Court action to date has resulted in rulings against both sides and subsequent appeals, with both sides declaring victory at each step of the process.

In its March 2012 ruling the WTO dismissed some of Boeing's appeal against a March 2011 ruling that it could not have launched an aircraft as sophisticated as the 787 for delivery as early as 2008 without subsidies in 1989-2006 that fell foul of WTO rules.

That earlier ruling - initially finding $19.1 billion in illegal subsidies - also found that the resulting quality of the 787 did serious damage to sales of the Airbus A330 and the original A350.

In December 2011, Airbus and the European Union claimed to have put themselves in compliance with the WTO ruling in the US-Boeing case against the EU-Airbus, that some aspects of launch aid from France, Germany, Spain and the UK for the development of some earlier Airbus models should not have been allowed.

However, one lawyer familiar with the cases notes that unless the two sides either walk away from the dispute or press for resolution via a global agreement on airliner subsidies, the dispute is likely to involve several years of compliance arbitration and subsequent appeals.

For a full report on the subsidy dispute see flightglobal.com/wto