New Rulings on Airbus-Boeing legal Battles

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    Aviation Week May 19, 2011

    U.S. Subsidy Complaint Largely Upheld

    May 19, 2011

    By Jens Flottau
    The World Trade Organization Appellate Body has largely, but not completely, upheld last year’s Panel ruling that certain subsidies provided by the European Union and some of its member states to Airbus are “incompatible” with WTO rules because they have caused “serious prejudice” to the interests of the U.S.
    In a report released May 18, the Appellate Body says the principal subsidies covered by the ruling include launch aid provided by Airbus partners France, Germany, Spain and the U.K. for the development of the Airbus A300, A310, A320, A330/A340, A330-200, A340-500/600 and A380, as well as certain equity infusions to companies in the Airbus consortium and certain infrastructure measures provided to Airbus, among other things.
    The Appellate Body also confirms the Panel’s determination that the subsidies caused Boeing to lose sales campaigns against Airbus involving narrowbody and widebody aircraft ordered by Emirates, Qantas, Singapore Airlines, Thai Airways International, South African Airways, Iberia, Air Berlin, EasyJet, CSA and AirAsia.
    “The WTO Appellate Body has confirmed without a doubt that Airbus received massive subsidies for more than 40 years and that these subsidies have greatly harmed the United States, including causing Boeing to lose sales and market share in key markets throughout the world,” U.S. Trade Representative Ron Kirk says in a statement. “President Obama and I insist that our partners live up to their commitments in the rules-based global trading system.” In Kirk’s view, “this decision confirms what we have said all along, that none of the launch aid provided to Airbus is consistent with Europe’s WTO obligations.” He also says that “while it revised the underlying findings for the United States from $20 billion to $18 billion, the message in the Appellate Body report is clear–launch aid is illegal and the European Union and the member states should refrain from future launch aid disbursements.”
    Boeing Chairman and CEO Jim McNerney says, “This is a clear, final win for fair trade that will level the playing field for America’s aerospace workers. (…) The WTO has concluded that launch aid and other illegal Airbus subsidies distorted the market, harmed U.S. industry and now must end.” Boeing’s General Counsel Michael Luttig concludes that “now Europe must comply within six months.”
    The appeals report on the initial 2010 panel ruling, however, was not entirely in favor of the U.S. position. The Appellate Body reversed the Panel’s findings that the financing provided by Germany, Spain and the U.K. to develop the A380 was contingent on anticipated exportation and thus a prohibited export subsidy. It also ruled that certain financing means by other EU member states also did not constitute prohibited export subsidies. As a result, the Appellate Body reversed the Panel’s recommendation that the EU withdraw prohibited subsidies within 90 days.
    Airbus, not surprisingly, came to different conclusions on the Appellate ruling. The airframer says in a statement that the report “constitutes the final blow to the Boeing-sponsored myth that government support to Airbus somehow caused harm to Boeing. The WTO has now confirmed definitively that government loans are a legal instrument and that none of the government loans made to Airbus over the past 40 years were prohibited. It also reaffirms that, contrary to Boeing’s repeated assertions, the subsidies did not cause any material injury to Boeing.”
    Rainer Ohler, head of public affairs and communications, says, “It’s time for Boeing to accept this legal defeat and end the masquerade. The WTO confirmation of the European loan system is a big victory for Europe.” Airbus sees “no significant consequences for Airbus or the European support system from today’s [May 18] decision.”
    A separate case brought by the EU against the U.S. for alleged subsidies to Boeing still is in front of the Appellate Body. A report is expected to be published later this year.
    Particularly, the European side has long called for a negotiated solution in the protracted dispute. However, since it started, new, publicly funded aircraft programs have been launched in Russia and China. Bombardier (Canada) and Embraer (Brazil) have developed larger aircraft that are beginning to compete with Airbus and Boeing at the low end of their product lines. Any solution would therefore have a global settlement. Subsidy Complaint Largely Upheld
    sobore likes this.

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