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American ShipperShipping

Dogfight continues over U.S., EU aircraft subsidy claims

The World Trade Organization on Friday issued a compliance panel report in which the United States said it rejects nearly all the European Union’s claims that U.S. subsidies to Boeing have harmed Airbus’s ability to sell large commercial planes.

   The World Trade Organization (WTO) on Friday issued a compliance panel report in which the United States said it rejects nearly all the European Union’s claims that U.S. subsidies to Boeing have harmed Airbus’s ability to sell large commercial planes.
   The EU challenged 29 U.S. state and federal programs that allegedly conferred $10.4 billion over six years in subsidies to Boeing, but the panel found that 28 of the 29 programs were consistent with WTO rules.
   The WTO panel found only one state-level program, which had an average value of about $110 million in the 2013-2015 period, to be contrary to WTO rules. The United States said it disagrees and plans to appeal this finding. 
   The Office of the U.S. Trade Representative noted that in September 2016, a WTO panel found that the European Union failed to remove existing WTO-inconsistent subsidies and further breached the trade body’s rules by giving Airbus billions of dollars in additional subsidies. 
   For years, the United States and European Union have been locked in a public dogfight over claims of illegal and excessive subsidies to their respective aircraft manufacturing giants – Airbus and Boeing.
   “The WTO report confirms what we have always said: the United States does not provide subsidies even remotely comparable to the uniquely large and uniquely harmful EU subsidies to Airbus,” said U.S. Trade Representative Robert Lighthizer in a statement. “It is time for the EU to stop making excuses and instead to join us in negotiating a settlement to remove all WTO-inconsistent subsidies so that our world-class aircraft manufacturers can compete on a level playing field.”
   However, the EU also claimed victory on Friday, stating that the WTO panel’s findings actually prove the U.S. illegally subsidizes Boeing.
   Specifically, the EU said the ruling backs its position that the U.S. not only failed to remove the existing subsidies but has “extended them and added significant new distorting subsidies,” including incentives from South Carolina and a Federal Aviation Administration research and development program.
   “The panel agrees that the U.S. has simply ignored existing WTO rulings and has continued to subsidize Boeing,” said EU Trade Commissioner Cecilia Malmström. “We will continue to firmly defend our industry to ensure we have a level-playing-field.”
   Under WTO rules, the panel report will be adopted if either party requests within 60 days of the report’s circulation, or either party may appeal the report before it is adopted. 

Chris Gillis

Located in the Washington, D.C. area, Chris Gillis primarily reports on regulatory and legislative topics that impact cross-border trade. He joined American Shipper in 1994, shortly after graduating from Mount St. Mary’s College in Emmitsburg, Md., with a degree in international business and economics.