European Union fails to end illegal subsidies for Airbus — WTO panel
- by Jerome Frank
- in World News
- — Dec 3, 2019
In May 2018, the WTO Appellate Body clarified that the European Union and Airbus have achieved compliance with respect to the vast majority of measures at issue, but considered that some adjustments were needed to the A380 and A350 loans, or to remedy their market effects.
It's causing less harm than expected to US rival Boeing Co (NYSE: BA), but will hamper Boeing's market share until Airbus ends production in 2021, the organization said.
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.
That is because Airbus finds the panel that "loans for the development of the A380 no longer have any influence on Boeing sales and that the value of the lost sales therefore no longer exists".
The WTO appeared to strengthen findings against the A350, saying it had both cost sales and damaged Boeing's market-share prospects - a process called impedance - in the busier twin-engined long-haul market where Boeing offers its 787 Dreamliner. The United States has singlehandedly blocked any new appointments, alleging that the body's members have overstepped WTO rules and draw excessive salaries and perks, among other things.
A spokesperson for the European Commission replied: "We believe that the panel made a number of serious legal errors when assessing EU compliance".
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The WTO's dispute settlement understanding, a sort of rulebook for resolving disputes, said that parties in dispute cases need to ensure full implementation of rulings before any WTO go-ahead for lifting of authorized tariffs, and that there can be no "second arbitration" such as in the case of the $7.5 billion arbitration award given to the United States. It gave no immediate details on the size of the possible increases, or which products could be added to the current list. History of the Airbus-Boeing dispute The EU and the United States have constantly claimed that each other's airplane manufacturer is unfairly subsidized.
The ruling reinforces an earlier WTO decision which allowed the United States to retaliate with tariffs on 7.5 billion US dollars in European Union exports.
European executives warned against a "lose-lose" trade war.
Based on these findings, Airbus would support to appeal this report, as per WTO rules.
The WTO Appellate Body will cease to function after December 10, due to USA blocking of new appointments, leaving a tight deadline for a challenge to Monday's ruling.
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.
