European Union fails to end illegal subsidies for Airbus — WTO panel

Elias Hubbard
December 3, 2019

The European aviation company said its position was to end all the pending trade disputes over its aircraft through the talks that the European Commission has initiated with USA authorities.

In its ruling, a WTO compliance panel found that the European Union had not taken sufficient steps to end harm to Boeing, the major rival to Europe's Airbus.

The WTO is expected to determine the number of retaliation rights that the European Union can impose early next year.

Following the October decision, the US enacted tariffs covering Airbus planes and various consumer goods, including whisky, cheese and olives.

The EU statement said: "We remain fully committed to working with the United States on a fair and balanced solution for our respective aircraft industries". Airbus had said Washington should slash its authorized tariffs of $7.5 billion to $5.5 billion since the WTO dropped its previous references to its A380 causing lost sales to Boeing.

The US Trade Representative (USTR) now should accept the reality that loans made to Airbus in the early 2000s - for the development of a product that is no longer being sold - do not have an impact on Boeing sales.

Boeing shares were down 1.44% at $360.90 at the time of publication.

Officials on both sides have expressed support for a negotiated settlement, while accusing the other of failing to take the prospect of a negotiated solution seriously. Both planemakers have promised to comply with WTO rulings.

The latest report put the world's largest corporate trade dispute squarely on the agenda for new EU Trade Commissioner Phil Hogan, who started his term on Sunday.

"The European Commission will decide on its course of action in light of this assessment, including the possibility of bringing an appeal in order to have these legal errors corrected", it said in a statement.

As so often following the dozens of rulings in the 15-year-old trade case, Airbus and Boeing were left starkly at odds. "There is accordingly no basis for Airbus's assertions that the report "implies" that the USA countermeasures should be reduced by $2 billion".

Boeing claimed a complete loss for its European rival Airbus, which it said continued to harm the United States aerospace industry by receiving billions of euros in illegal aid.

The USTR rejected that argument, saying it saw no basis in the report to justify reducing US retaliatory tariffs.

USA sources argued such calculations were "irrelevant", since only full compliance or an agreement to settle the trade dispute politically would cancel WTO approval for the tariffs.

European executives warned against a "lose-lose" trade war.

Experts expect the $7.5-billion cap to remain in place as the WTO works through an appeals process and related legal issues.

By appealing the new compliance finding, the United States could effectively send the case into a void as the WTO Appellate Body, which hears appeals, is about to cease functioning due to U.S. blocking of new appointments, experts said.

Any appeals launched after that date risk falling into a legal void, while it remains unclear whether the Appellate Body will be allowed to rule on appeals filed before then.

Other reports by Click Lancashire

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