WTO Panel Issues Ruling to U.S. and EU in Dispute Over Boeing Subsidies
On January 31, 2011, the World Trade Organization panel examining the European Union’s complaints of U.S. government assistance to Boeing issued its confidential ruling to the parties in “U.S. - Measures Affecting Trade in Large Civil Aircraft” (DS353). This report is not expected to be available for a few weeks.
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Airbus Says Ruling Confirms Boeing Has Received Massive Subsidies for Decades
In response to the ruling, Airbus issued a press release which states that the WTO decision confirms that Boeing has received massive and illegal government subsidies for many decades, and that they have had a significant and ongoing negative effect on European industry.
According to Airbus, the final WTO-report to be publicly released in a few weeks can be expected to say:
- Boeing would not have been able to launch the 787 without illegal subsidies.
- Boeing has received at least $5 billion of US taxpayer dollars which has been determined illegal. Quantification of the additional subsides beyond this figure will take place in later stages of this dispute if Boeing chooses to pursue it.
- An additional more than $2 billion in state and local subsidies that Boeing will receive in the future are illegal.
- The effect of the subsidies is significantly larger than the face value of the subsidies in light of their particularly pervasive nature.
- The pervasive subsidies have thoroughly distorted competition within the aviation industry, directly resulting in significant harm to the European aerospace industry.
- The effect of these subsidies will continue in the future, putting Airbus at a significant disadvantage. In concluding that Department of Defense (DoD) and NASA funding are illegal subsidies, the WTO decision will require fundamental changes to the US funding mechanisms.
Boeing Says Panel Rejected Majority of EU Claims, Ruling Against Airbus Was Worse
According to a statement by Boeing, the WTO panel’s ruling has rejected the vast majority of Europe's claims against the U.S., including the vast majority of its research and development claims -- except for some $2.6 billion.
Boeing believes that "Nothing in today's reports even begins to compare to the $20 billion in illegal subsidies that the WTO found last June that Airbus/EADS has received (comprised of $15 billion in launch aid, $2.2 billion in equity infusions, $1.7 billion in infrastructure, and roughly $1.5 billion in R&D support)."
It adds, "Today's decision will not require any change in policy or practice, or other remedy that comes close to approaching the billions of dollars of launch aid that must be repaid by Airbus or restructured on proven commercial terms. As a result of the June WTO ruling, EU governments and Airbus/EADS must repay or restructure $4 billion in still outstanding illegal launch aid subsidies Airbus received to develop the A380. They must also remedy the adverse effects of the additional $16 billion in other illegal subsidies Airbus received.”
(See ITT’s Online Archives or 07/01/10 news, 10070124, for BP summary of the WTO panel report in the related dispute regarding U.S. allegations of EU subsidies provided to Airbus.)
Boeing statement, dated 01/31/11, available here.
Airbus press release, dated 01/31/11, available here.