The World Trade Organization (WTO) on Thursday said that the
European Union has failed to halt subsidies to Airbus as it was directed to do
in a 2011 ruling.
The WTO further found that the EU has granted new subsidies
to Airbus for the long-range, widebody A350 aircraft since the ruling.
“It is apparent that the A350XWB could not have been
launched and brought to market in the absence of [launch aid],” the panel
wrote.
The new subsidies amounted to more than $4 billion, the
Office of the United States Trade Representative said in a statement Thursday.
That money is a portion of the total of nearly $22 billion in subsidized
financing that Airbus has received from the EU, Germany, France and the UK, the
office said.
“This report is a sweeping victory for the United States and
its aerospace workers,” Ambassador Michael Froman said in prepared remarks. “We
have long maintained that EU aircraft subsidies have cost American companies
tens of billions of dollars in lost revenue, which this report clearly proves.”
Boeing, too, applauded the panel’s decision.
“Today’s historic ruling finally holds the EU and Airbus to
account for their flouting of global trade rules,” Boeing CEO Dennis Muilenburg
said in a statement.
Thursday’s finding is the latest salvo in a more than
decade-long dispute between the EU and U.S. over subsidies to the aviation
giants Airbus and Boeing.
The WTO is also reviewing cases brought by the EU that claim
that the U.S. and Washington state have provided Boeing, the U.S.’s largest
exporter, with illegal subsidies.
In a statement, Airbus said that it would likely appeal the
ruling by the WTO panel. The company downplayed the finding related to A350
subsidies, saying that only “tiny tweaks” would be required to come into
compliance. Boeing also anticipated favorable rulings in the EU cases against
the U.S. and Washington.
“Before year’s end the record subsidies for the 777X will
almost certainly be condemned as illegal,” Airbus said in reference to the
Boeing widebody aircraft.
Richard Aboulafia, an aircraft industry analyst with the
Fairfax, Va.-based Teal Group, said that he doesn’t believe Thursday’s ruling
will lead to consequences for the EU or Airbus.
“I just don’t think it goes anywhere,” he said.
The WTO has no enforcement mechanism other than to suspend
trade rules for the U.S., which would allow it to retaliate.
Europe can say, ‘Do you really want a trade war over this,’”
Aboulafia said.