Airbus has suffered a reverse in its long-running World Trade Organisation dispute with Boeing, conceding that the investigating panel has found "an element of subsidy" in past loans to the airframer.
However, Airbus says that the WTO judgement rejects 70% of claims made by the USA in a case brought to the trade body alleging that illegal subsidies had been provided by European governments.
The text of the WTO ruling, which follows an interim draft judgement, is not yet publicly available, but Airbus says it has "learned" the contents. The theoretical timeframe for an appeals process will span 90 days from publication.
According to Airbus, the WTO's report confirms the European reimbursable loan mechanism to be "a legal and compliant instrument of partnership between government and industry" that caused no material injury to any US interest. A "material injury" could take the form of job losses or lost profits.
Airbus says it "will study" a finding that loans contained subsidy, and stresses that "possible future funding for the A350 is not affected in any way" by the WTO report.
The case was initiated by the USA in 2004, pre-dating the launch of Airbus's A350 XWB. It followed a decision by the US government to unilaterally withdraw from a 1992 bilateral European Union-US agreement on trade in large civil aircraft.
The WTO's finding that research grants are "structurally non-compliant" has important implications for a separate WTO investigation of alleged US subsidies to Boeing, says Airbus. A ruling on the case, which was brought by the EU in retaliation to the US action, is expected in June.
Boeing's interpretation of the verdict in the US-brought case contrasts sharply with that of its transatlantic rival: "The United States has prevailed on all of the major issues."
The US airframer hails the WTO's "powerful, landmark judgement" as "good news for aerospace workers across America who for decades have had to compete against a heavily subsidised Airbus".
The WTO decision should "level the competitive playing field" with Airbus and "set an important precedent for other nations with aspirations to enter the commercial airplane business", it adds.
Boeing is urging Airbus and its sponsor governments to "change course" on plans to support the A350 XWB programme with launch aid, and to "fully comply with the WTO's clear ruling".
Airbus believes that the WTO conflict is likely "to drag along for at least a few more years" and that a resolution can only be achieved through transatlantic negotiations.
That view is shared by Deen Kaplan, a partner and international trade law specialist at US law firm Hogan & Hartson. "The WTO has no power to force any of its members to take an action that they are unwilling to take," he notes.
A WTO judgement will typically recommend that a member bring its measures "into compliance with its WTO obligations", triggering negotiations on what constitutes the reasonable period of compliance. By precedents, the resulting compliance obligations are only forward-looking, rather than retrospective.
If one side subsequently suspects the other of continuing non-compliant behaviour, it must pursue a separate WTO arbitration procedure if it is to gain authority to impose sanctions.
In a WTO case the EU brought against the US on tax treatment for foreign sales corporations, there was a four-year gap between the decision of the appeal body and the imposition of sanctions.
Source: Flight International
