WTO: EU failed to stop subsidizing Airbus

DEVELOPING NEWS: WTO rules EU failed to stop subsidies on some Airbus aircraft

DEVELOPING NEWS: WTO rules EU failed to stop subsidies on some Airbus aircraft

As Donald Trump threatens European companies with sanctions following his withdrawal from the United Nations framework agreement with Iran on its nuclear programme, the World Trade Organisation Appellate Body has concluded that Boeing's complaint of illegal subsidies to Airbus by some European governments is largely unproven under its rules.

The WTO decision affirmed a ruling that France, Germany, Spain and the United Kingdom had 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.

The U.S. says it would slap tariffs on European goods unless the EU stopped "harming U.S. interests", but the European Commission says the U.S. had lost most of its claims and that much of the aid faulted by the WTO had expired in 2011.

The WTO Appellate Body has published today the first of two rulings expected this year on subsidies in the large commercial aircraft dispute between the USA and the EU.

BA shares closed -0.7% in today's trade, while EADSY ended -1.9%.

Boeing said the victory secured on its behalf by the U.S. trade office could see the European Union slapped with "the largest-ever WTO authorization of retaliatory tariffs".

A conciliatory Muilenburg concluded: "Now that the WTO has issued its final ruling, it is incumbent upon all parties to fully comply as such actions will ultimately produce the best outcomes for our customers and the mutual health of our industry".

But EU Trade Commissioner Cecilia Malmstrom also conceded that WTO had put the onus on the bloc to change its subsidies practices regarding Airbus.

The ruling clears the way for what could be the largest retaliatory action in WTO history. This is expected to be the largest-ever WTO authorization of retaliatory tariffs.

"The WTO appellate body has definitively rejected the USA challenge on the bulk of European Union support to Airbus, and agreed that the European Union has largely complied with its original findings", European Union trade commission Cecilia Malmstrom said in a statement.

Therefore, Airbus chief executive Tom Enders already said that the WTO ruling of Tuesday "is really only half the story".

Both sides are expected to push for billions of dollars in sanctions annually by barring a negotiation deal.

The WTO case has yielded 5,000 pages of filings and cost tens of millions of dollars. Of these, $9 billion are involved in the outstanding A350 and A380 claims. It has meanwhile levelled significant subsidy claims against Boeing. Boeing has estimated that it suffered commercial damages worth between US$7 billion and US$10 billion as a result.

Originally, Boeing argued that the EU's unlawful aid to the two plane programs came to $22 billion. As airlines expand into the Middle East and China, both companies will be vying for new business, he said. For a claim to stick at the WTO, subsidies must be found not just to exist but to have caused real harm.

"Companies should not have to compete with governments - that is what this case is about", said Robert Novick, co-managing partner at Boeing's trade lawyers WilmerHale.

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