WTO Rules $22Bln EU Subsidies to Airbus Illegal, Authorizes US Retaliation


The WTO found the subsidies to Airbus violated global trade rules in 2011 and, when the United States complained the European Union had not complied with the WTO's findings, a WTO compliance panel agreed the subsidies had continued and had cost Boeing tens of billions of dollars in lost sales. Tariffs could be scheduled as early as 2019. "The commercial success of products and services should be driven by their merits and not by market-distorting actions", said Boeing head Dennis Muilenburg.

This is expected to be the largest-ever WTO authorization of retaliatory tariffs.

The WTO ruling did reverse parts of a 2016 decision, finding no fault in the development of the A320 and A330 jets.

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.

The trade court in September ruled in Boeing's favor in another case brought by the European Union, overturning an earlier finding that $8.7 billion in state aid to Boeing for making the 777X in Washington was a prohibited subsidy.

The remaining claim in front of the WTO alleges illegal tax breaks for the 787 and 777.

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In January Canadian plane maker Bombardier escaped a punishing 300 per cent duty on sales of its C-series aircraft in the USA which Boeing had said received an illegal subsidy from the United Kingdom and Canada.

The EU appealed the compliance panel's findings to the WTO's appellate body, which reversed course and found the EU member states have largely complied with the 2011 order.

The ruling is the latest action in an acrimonious 14-year battle between the aviation rivals, which have undertaken a seemingly endless spate of lawsuits and counterlawsuits before the trade body. Boeing has in the past shown complete disregard by ignoring the recommendations and continuing with their illegal behavior.

The European Commission argued that the WTO decision rejected most USA claims and was its victory.

Airbus CEO Tom Enders commented: "Of course, today's report is really only half the story - the other half coming out later this year will rule strongly on Boeing's subsidies and we'll see then where the balance lies".

Airbus says Boeing's willingness to deliver the last rites to the A380 contradicts Boeing's claim that it has been damaged by the same aircraft. Without that, the additional loan repayment penalties, potential tariffs and public perception scorecard will put the European company at a significant disadvantage in its stated goal of dethroning the American company as the world's top aerospace company.