September 23, 2016

U.S. claims win in dispute with EU over aerospace subsidies

The Obama administration announced Sept. 22 it has won an important victory in a World Trade Organization dispute with the European Union over subsidies to airplane manufacturer Airbus.

In June 2011, the WTO found that the EU and four of its member countries provided billions of dollars in subsidized financing to Airbus. While the EU subsequently claimed to have come into compliance, the United States disagreed and requested that a compliance panel intervene.

The Obama administration said the WTO panel confirmed the U.S. was correct. Plus, it said the panel found the EU had provided billions of dollars more in subsidies, causing lost sales worth tens of billions of dollars for Boeing.

United States Trade Representative Michael Froman says the panel’s finding is “a sweeping victory for the United States and its aerospace workers.” He called on the EU, Germany, France, the United Kingdom and Spain “to respect WTO rules.”

“We call on them to end subsidized financing of Airbus immediately,” Froman said.

However, Reuters is reporting that the European Union “signaled that it may appeal the latest World Trade Organization judgment against European government subsidies for plane maker Airbus.”

Commenting on the report, the EU’s European Commission headquarters said the WTO report, which found the subsidies had harmed U.S. competitor Boeing, should be read in the context of two other reports expected to address U.S. subsidies in coming months.

“The commission said the EU had prevailed over U.S. arguments that aid for the A350 and A380 jetliners fell into the WTO’s most serious category of banned support that has to be withdrawn without delay, while support for other aircraft had ended,” said the Reuters story.

“But there are certain findings of the panel that we consider to be unsatisfactory. We are closely analyzing the report,” the commission said, noting that both the EU and the United States had the right to appeal.

Boeing is the only American producer of large civil aircraft and is the largest single U.S. exporter. Boeing has major facilities around the United States, including in Washington and South Carolina. Members of the Washington congressional delegation joined the administration in hailing the ruling, which has the potential to result in tariffs that would likely cost Airbus market share.

During what has been a long-running dispute over subsidies for the aerospace industry, the WTO has also issued rulings over the years determining that Boeing was the recipient of banned federal and state support.

Sen. Maria Cantwell, D-Wash., called on the EU to come to the negotiating table and settle, rather than wait for future tariffs on Airbus planes.
“Without having to compete against illegal, market-distorting practices, Boeing should win more sales around the world,” Cantwell said.

A separate dispute brought by the European Union against the United States for subsidies allegedly provided to Boeing is currently before the World Trade Organization’s Appellate Body. The panel report in that dispute was circulated to WTO Members on 31 March 2011. Both the European Union and the United States have appealed aspects of that panel report. AP

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