EU paid Airbus billions in illegal subsidies

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EU paid

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The World Trade Organisation (WTO) has ruled that the European Union paid billions of dollars in illegal subsidies to Airbus.

The US Trade Representative (USTR) said the ruling opens the way for placing tariffs on EU goods.

The WTO dismissed an appeal by Airbus saying the European plane maker had failed to fix the harm done to Boeing.

The USTR argued that European countries had given $22bn in state aid to Airbus to help launch its A380 and A350 jets.

Airbus has a similar case against Boeing awaiting a ruling from the WTO. The accusations, rulings and appeals have been going on for 14 years.

 

The European Commission said most of the EU support challenged by the US ended in 2011 and it had "only a few" remaining things to do to be compliant.

It pledged "swift action" on those fronts.

Boeing chairman and chief executive Dennis Muilenburg said: "Today's final ruling sends a clear message: disregard for the rules and illegal subsidies are not tolerated,"

Airbus chief executive Tom Enders said: "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."

Subsidies

US Trade Representative Robert Lighthizer said: "It is long past time for the EU to end these subsidies.

"Unless the EU finally takes action to stop breaking the rules and harming U.S. interests, the United States will have to move forward with countermeasures on EU products."

During the 1990s the EU and the US followed agreed rules on subsidising aircraft makers until the US pulled out of the deal and both sides filed complaints against each other in 2004.

The ruling is now likely to give the US greater leverage as it negotiates with the EU over steel and aluminium tariffs.

Analysis by Theo Leggett

The WTO panel has issued a ruling, and both sides have claimed victory. To anyone who has followed the ins and outs of this A380-sized trade dispute over the past 14 years, that will not come as any surprise.

Boeing and the US are trumpeting their view that it shows "disregard for the rules and illegal subsidies is not tolerated". Meanwhile Airbus is portraying the decision as a "significant legal success" because many of Boeing's original complaints have been dismissed along the way.

And still grinding through the WTO machinery is a separate complaint the EU has filed against Boeing over allegedly illegal subsidies from Washington State, the US Department of Defense and NASA.

The reality is that developing large aircraft requires huge amounts of money - and the best source of that, one way or another, is governments. It isn't only happening in Europe either. Russia and China, for example, are both funding major civil aircraft programmes.

In fact, this dispute looks increasingly like a relic of the days when Boeing and Airbus enjoyed a cosy duopoly, and could afford the distraction of years of complex litigation.