Flight International - 22 May 2018

THIS WEEK

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This Week P

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World Trade Organization
(WTO) appeals panel has
completed its review of alleged
government subsidies provided
to Airbus for the A350 and A380,
largely siding with Boeing and
mostly upholding the body’s
2016 conclusions.
With the Chicago-headquar-
tered airframer hailing the deci-
sion as a victory, and given the
current protectionist climate in
Washington DC, there are fears
that the ruling could simply
touch off a new EU-US trade war.
“There were things that the US
didn’t get and things that Airbus
might get in the future, but in the
here and now, Boeing got some-
thing,” says Richard Aboulafia,
vice-president of analysis at
US-based Teal group. “But rather
than use this as the way to a nego-
tiated settlement, the Trump ad-
ministration might shoot from
the hip. It risks throwing a
wrench into the industry.”
The 15 May appellate report
may mark the final act in the
USA’s long-running subsidy dis-
pute against Airbus and several
European governments. Howev-
er, a separate WTO investigation
against Boeing remains open and
is expected to rule later this year.
With the WTO dispute having
run since at least 2005, industry

observers may feel they have seen

this all before, not least that both

airframers conformed to type and

claimed that the latest verdict

proves they were in the right.

The WTO “found that the Eu-

ropean Union has failed to hon-

our multiple previous rulings

and has provided more than $

billion in illegal subsidies” to

Airbus, says Boeing. “Today’s de-

cision ends the dispute and clears

the way for the United States

Trade Representative to seek rem-

edies in the form of tariffs against

European imports.”

IMPORT TARIFFS

What may be different this time is

the Trump administration’s more

protectionist stance. It is already

threatening the EU with tariffs on

imports of steel and aluminium,

and the WTO ruling provides it

with further ammunition.

“President Trump has been

clear that we will use every avail-

able tool to ensure free and fair

trade benefits American work-

ers,” says US trade representative

Robert Lighthizer. “This report

confirms once and for all that the

EU has long ignored WTO rules,

and even worse, EU aircraft sub-

sidies have cost American aero-

space companies tens of billions

of dollars in lost revenue.”

TRADE JON HEMMERDINGER BOSTON & DOMINIC PERRY LONDON

Boeing claims victory in subsidy ruling

WTO broadly upholds decision that EU support for Airbus harmed US interests, as industry braces for likely retaliation

“Unless the EU finally takes

action to stop breaking the rules

and harming US interests, the

United States will have to move

forward with countermeasures

on EU products.”

WTO rules mean that retalia-

tory measures do not have to be

targeted at aircraft imports.

While the WTO found Boeing

had lost sales of the 787 and 747-

as a result of subsidies – notably

loans at lower-than-market rates of

interest – to the A350 and A380, it

rejected accusations of harm

caused by the A320 and A330.

Airbus says the ruling “con-

firms the legality of the loan part-

nership approach between Air-

bus and European governments”.

Only “minor” elements related to

A380 and A350 financing “re-

main to be addressed”, it adds.

“Airbus is currently imple-

menting changes to respond to

these findings,” the airframer

says, noting that the “only real so-

lution to [the] 15-year-long dis-

pute remains a negotiated deal.”

Recent concessions by Trump

to Chinese telecommunications

firm ZTE have given some observ-

ers hope that a deal can be done,

but Aboulafia is not convinced.

“The WTO [civil aircraft] dispute

still has me concerned, as both

sides are going to continue to see

what they want to see,” he says.

If “reasonable people” were in

place there would be a “wonder-

ful path” to a negotiated settle-

ment, he says, potentially putting

new binding rules in place for the

sector, “but that’s not the case

right now”.

“Both sides need to sit down

and establish a new set of rules or

go back to living in a reality

where economic nationalism has

made an ugly comeback.” ■

Panel ruled that launch

aid for A350 was

against rules

Airbus

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