WTO panel finds EU unfairly subsidized Airbus

WTO panel finds EU unfairly subsidized Airbus    A dispute settlement panel at the World Trade Organization has ruled in favor of the United States in a case claiming launch aid and other subsidies provided by European countries to the aircraft manufacturer Airbus over the last four decades caused adverse effects to the interests of U.S. businesses and workers.
   Specifically, the WTO panel found that every instance of launch aid provided by certain EU nations for new Airbus aircraft over the last 40 years, as well as other subsidies the United States had challenged, caused adverse effects to U.S. interests and therefore are WTO-inconsistent subsidies, according to a statement by the office of U.S. Trade Representative Ron Kirk.
   The panel also concluded that certain launch aid provided for the A380 superjumbo jet was a prohibited export subsidy under WTO rules.
   'What emerges clear as day from this panel report is that Europe has never been able to provide launch aid in a manner that is consistent with its WTO obligations,' said Office of the USTR General Counsel Tim Reif. 'This panel report should therefore be a strong signal to the European Union and the member states to refrain from future launch aid disbursements.'
   Kirk said the subsidies have hurt American interests.

Kirk

   'These subsidies have greatly harmed the United States, including causing Boeing to lose sales and market share,' he said. 'Today's ruling helps level the competitive playing field with Airbus.'
   However, the EU disputed the notion the panel report was an indictment of EU nation's support of Airbus.
   'This final report needs to be read together with the forthcoming interim report on subsidies provided in the U.S. to Boeing,' said EU Trade Commissioner Karel De Gucht. 'Only then will we have a full and more balanced picture of this dispute. The EU remains committed to a negotiated outcome to the dispute with no pre-conditions on either side.”
   The WTO panel, the EU said, has rejected the allegation that support for Airbus caused “material injury” to the U.S. aircraft industry. It has found that EU support neither damaged Boeing’s pricing nor profitability, and did not lead to a loss of jobs at the company. The panel’s findings on the economic effects of Airbus’ funding on the U.S. aircraft industry are limited.
   'The panel has found that the use of Repayable Launch Investment (RLI) as a financing system is fully compatible with WTO rules, as long as the terms of financing are based on market conditions,' the European Commission said in a statement. 'It has nevertheless found certain RLI measures, in particular contracts dating from the 1970s and 1980s, when Airbus was being established, to have contained an element of subsidy. The EU will now closely examine the panel’s recommendations on this issue.'
   The commission said it was 'disappointed' with the panel findings on the subsidies afforded Airbus in the development of the A380. The EU said it has yet to decide whether to appeal these and other adverse findings, but will do so in the near future.
   If the panel report is adopted or if it is affirmed on appeal, the WTO will recommend that the member states withdraw the prohibited subsidies within 90 days. The WTO will also recommend that the EU and the member states that back Airbus take appropriate steps to remove the adverse effects or withdraw the subsidies within six months.
   Should the EU and the relevant member states fail to comply with these recommendations by the deadline, the United States would be able to seek the right to impose countermeasures.

Locke

   'Today's WTO decision marks a victory for the United States and for American workers at the tens of thousands of small- and medium-sized companies that produce components for Boeing's jetliners,' said U.S. Commerce Secretary Gary Locke. 'No industry supports more U.S. jobs through exporting than American aerospace manufacturing. The decision acknowledges that distortive government subsidies should have no place in the global marketplace.' ' Eric Johnson