EU Declares Win in Airliner Trade Spat With US

(CN) – The World Trade Organization’s highest court on Tuesday rejected the bulk of a dispute filed by the United States against the European Union over EU states’ financial support of France-based aircraft manufacturer Airbus.

In 2004, the United States lodged its original complaint with the WTO, claiming support of Airbus by France, Germany, Spain and the United Kingdom for the development of civilian airliners was unfair because it hurt U.S.-based Boeing’s sales and market share.

The WTO found the subsidies to Airbus violated international trade rules in 2011 and, when the United States complained the EU had not complied with the WTO’s findings, a WTO compliance panel agreed the subsidies had continued and had cost Boeing tens of billions of dollars in lost sales.

The EU appealed the compliance panel’s findings to the WTO’s appellate body, which reversed course and found the EU member states have largely complied with the 2011 order. The appellate body also found Boeing sales were largely unscathed because subsidies of Airbus’ A300, A310, A320 and A330/340 aircraft had ceased with the 2011 order.

But the appellate body found a few compliance issues the EU must address, including how loans to Airbus’ wide-body programs – involving the redesign of the giant A380 and the company’s answer to Boeing’s 787 Dreamliner, the A350 – are repaid. Those compliance issues represent the only instances where Boeing was negatively affected, according to the European Commission, which praised the appellate body’s ruling.

"The WTO appellate body has definitively rejected the U.S. challenge on the bulk of EU support to Airbus, and agreed that the EU has largely complied with its original findings,” EU trade commission Cecilia Malmstrom said in a statement. “Significantly, it dismissed the vast majority of the U.S. claims that this support had damaged Boeing's aircraft sales. The EU will now take swift action to ensure it is fully in line with the WTO's final decision in this case.”

Malmstrom added: “Also, we look forward to the upcoming ruling by the appellate body on U.S. compliance with the WTO findings of the massive and persistent government support to Boeing."

She refers to a challenge of a 2012 finding by the WTO compliance panel that the United States had failed to comply with an order to claw back at least $8 billion in illegal subsidies to Boeing, in a similar complaint brought by the EU.

Meanwhile in 2016, the WTO dinged Washington state over 30-year tax breaks it gave to Boeing to produce the 777X airliner. In that case, the EU complained the Evergreen State unfairly made the tax breaks contingent on Boeing’s use of domestic parts, particularly for the 777X’s wings.

Like the 787, Boeing’s 777X will compete with the Airbus A350. German carrier Lufthansa has already ordered 34 to replace its fleet of aging 747s.

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