Partial US victory on Airbus funds
By Financial Times reporters
Published: September 4 2009 21:04 | Last updated: September 5 2009 01:02
The World Trade Organisation has handed a partial victory to the US in a preliminary ruling on its claim that billions of dollars in European government loans to Airbus constitute illegal subsidies.
Roughly two-thirds of the claims against government aid to Airbus have been dismissed, according to several people with knowledge of the ruling.
The WTO found that some of the €3bn ($4.3bn) in repayable launch aid for the A380, the world’s biggest passenger jet, was tantamount to subsidies as was funding for research, development and infrastructure. But the panel noted that repayable launch aid can be a viable option for financing aircraft. This will be seen in Europe as a victory.
One European said: “The draft report has dismissed 70 per cent of US claims about alleged EU subsidies to Airbus. It has also confirmed that repayable launch aid is a permissable way to partner governments.”
Aid to the new A350 wide-bodied jet being developed by Airbus – the rival to Boeing’s Dreamliner – was too recent to be included.
Still, people familiar with the US position said the WTO was unequivocal in its ruling that launch aid for the A380 constituted a subsidy. They disputed the signficance of the dismissal of individual claims, terming the WTO action “a direct rebuke to decades of launch aid to Airbus”.
Maria Cantwell, Democratic senator for Washington, Boeing’s home state, called the decision a “great day” for the company. “When finalised, this long-awaited ruling will help restore true competition in the commercial aviation market, and I applaud the WTO’s decision that government subsidies of Airbus are illegal,” she said.
The 1,000-page interim report, which is supposed to be confidential, was given to US and European Union trade diplomats in Geneva on Friday afternoon. The final report will not be published for several months.
The US filed a WTO complaint in October 2004 challenging $15bn in loans by the French, British, German and Spanish governments for development of the A380 and other aircraft dating back to 1970.
European insiders said the EU was likely to wait for the WTO’s ruling on Europe’s challenge to US subsidies for Boeing before reacting. This alleges that Boeing has received subsidies of $24bn over the years through federal defence and space contracts and state tax breaks. An initial ruling is expected in seven months. Boeing has denied receiving illegal subsidies.
Lutz Guellner, EU trade spokesman, said: “It is important to recall that this report is only half of the story and must be read with an interim report on the EU case against the US over aid to Boeing.”
Airbus said a definitive verdict in the legal process, including appeals, could take another four years.
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