Economy

European Union failed to stop subsidizing Airbus — WTO

European Union failed to stop subsidizing Airbus — WTO

In its ruling on May 15, the WTO said the bloc had failed to remove support in the form of preferential government loans for the world's largest airliner, the A380, and Europe's newest long-haul plane, the A350, causing losses for Boeing and USA aerospace workers.

European Trade Commissioner Cecilia Malmstroem insisted that the ruling also rejected "the vast majority" of USA claims against it, while saying in a statement that the bloc "will now take swift action to ensure it is fully in line with the WTO's final decision in this case".

The Geneva watchdog, however, had dismissed US claims that the loans for the most popular models of Airbus, the A320 and A330, were costing aignisignif sales to Boeing.

U.S. Trade Representative Robert Lighthizer said in a statement the United States would slap countermeasures on European goods unless the EU fell into line.

BA shares closed -0.7% in today's trade, while EADSY ended -1.9%. "Unless the European Union finally takes action to stop breaking the rules and harming USA interests, the United States will have to move forward with countermeasures on European Union products". But the European Union said it planned to take "swift action" to align with the WTO's recommendations. That figure includes the many subsidies that the WTO said were lawful.

It has been predicted that the tarrifa of Boeing could reach billions of dollars a year starting as early as 2019.

The move means that the USA, under WTO rules, can ask an arbitrator to determine the level of retaliation it can seek against the European bloc as a result of its failure to comply. It said it would comply swiftly on the rest.

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Later this year, a separate WTO compliance panel is expected to deliver its decision on whether the USA complied with the terms of a 2012 ruling against illegal US tax subsidies that gave Boeing an unfair advantage.

"Today's report is really only half the story", Airbus Chief Executive Tom Enders said.

Both sides are expected to push for billions of dollars in sanctions annually by barring a negotiation deal.

The WTO case has yielded 5,000 pages of filings and cost tens of millions of dollars. In the coming months, WTO's appelate court is set to rule on Airbus's counter-claim that Boeing received more than $20 billion in illegal aid under tax breaks granted by Washington state. Of these, $9 billion are involved in the outstanding A350 and A380 claims. Airbus estimates the total amount of lost sales since the beginning of these disputes at over $100bn.

But the organization also overturned a previous ruling that found the subsidies were hurting sales of the single-aisle 737, Boeing's most popular plane.

Boeing may lose upward of $20 billion in aircraft sales because of the US withdrawal from the nuclear pact. As airlines expand into the Middle East and China, both companies will be vying for new business, he said.

"The result is simple: Airbus pays back its loans, Boeing pays back nothing and continues to exploit the generosity of the US taxpayer", outgoing Airbus CEO Tom Ender said. For a claim to stick at the WTO, subsidies must be found not just to exist but to have caused real harm.