WTO hands victory to US over EU in aid tussle

EU loans to Airbus have caused \'genuine and substantial\' commercial damage to rival Boeing

Published: 23rd September 2016 08:44 AM  |   Last Updated: 23rd September 2016 08:45 AM   |  A+A-

wto reuters

The WTO sees world trade growth of 2.8 percent this year and 3.9 percent in 2016.| (File/Reuters)

LONDON: A fresh transatlantic trade war is in the offing after the World Trade Organisation (WTO) ruled against the European Union in a long-running legal battle over billions of pounds of state aid to aviation giant Airbus.

The WTO ruled so-called "launch aid" loans given to Airbus by EU members to develop its fleet had caused a "genuine and substantial" loss of sales for its competitor Boeing.

It also criticised the EU for failing to rein in billions of dollars in illegal subsidies, despite being instructed to do so.

Four EU member states - France, Germany, Spain and Britain - had not complied with WTO calls to phase out subsidies, the intergovernmental trade body said.

The dramatic ruling has set the stage for the US to seek up to $10bn (pounds 7.6bn) in annual trade tariffs on EU imports, according to Boeing.

It's the latest step in a more than decade-old trade spat between rivals Airbus and Boeing, pitting the EU against

the US.

The Obama administration hailed the decision an "important victory". US trade representative Michael Froman called on the EU, Germany, France, the UK and Spain "to respect WTO rules".

"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. We will not tolerate our trading partners ignoring the rules at the expense

of American workers and their families," he said.

In a blow to Europe's argument that the most recent Airbus jet, the A350, fell outside the case, the WTO said funding for the jet had been subsidised, but rejected US claims that it fell into the most serious category of "prohibited" aid.

Boeing executive vice president and general counsel J Michael Luttig said that "the day of reckoning for launch aid has finally arrived".

"The World Trade Organisation has now found that Airbus is and always has been a creature of government and of illegal government subsidy," he said.

The case is the biggest to go before the WTO. It began in 2006, when the US government brought a claim to the WTO against the EU, alleging unfair state support for Airbus. Since then, both sides have won and lost complaints filed against one another.

Boeing's chairman and chief executive, Dennis Muilenburg, said: "Today's historic ruling finally holds the EU and Airbus to account for their flouting of global trade rules. This long-awaited decision is a victory for fair trade worldwide and for US aerospace workers, in particular."

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