WTO rules Boeing had illegal subsidies
By Peggy Hollinger in Paris, Nikki Tait in Brussels, Hal Weitzman in Chicago and Robin Harding in Washington
Published: January 31 2011 22:23 | Last updated: January 31 2011 22:23
Boeing’s flagship 787 Dreamliner has benefited from illegal US government subsidies that have distorted market competition, according to the World Trade Organisation.
The ruling, which will not be published for several weeks, marks a key moment in a bitter six-year trade dispute that has pitched the European Union against the US over the funding of their respective aircraft makers.
In June, the WTO ruled that Airbus, the Franco-German aircraft maker, had also benefited from illegal aid in the form of repayable loans linked to export sales in the development of its A380 superjumbo.
The two rulings will now step up the pressure on politicians from both sides to negotiate a settlement and find a new agreement on the acceptable form for state aid.
The current row, the largest trade dispute ever brought before the WTO, was sparked when the US government abandoned a previous accord hammered out in 1992.
But the arrival of new, aggressive competitors, such as Brazil and China, is making the need for common rules on the financing of new aircraft more pressing, say industry executives.
The European Commission welcomed the findings, which will remain confidential until formally published in the next few weeks. A spokesman for EU trade commissioner Karel de Gucht said it was a “solid report” that “sheds further light on the negative consequences for the EU industry of these US subsidies and provides a timely element of balance in this long-running dispute”.
Airbus claimed that the ruling found at least $5bn in US government aid illegal – much of which was channelled through the Department of Defense and the Nasa space agency.
In addition, a further $2bn in state and local subsidies were deemed unfair, the group said. The aircraft maker said the report would show that Boeing could not have launched its rival to Airbus’s A380, the 787 Dreamliner, without this illegal aid, which it claimed had cost it $45bn in lost sales.
Boeing said the report would show that the WTO had rejected almost all of Europe’s claims against the US, including the vast majority of its R&D claims. “Nothing in today’s reports even begins to compare to the $20bn in illegal subsidies that the WTO found last June that Airbus/EADS has received,” it said.
The US government also rejected the European claim of victory. Nefeterius McPherson, spokesman for Ron Kirk, the US trade representative, said the US was “confident that the WTO will confirm the US view that European subsidies to Airbus dwarf any subsidies that the US provided to Boeing.”
Both sides are appealing against the WTO’s decision last year on European aid to Airbus. They are also expected to appeal against the latest decision on US aid to Boeing. Each side will have 60 days to appeal.
Copyright The Financial Times Limited 2011
By Peggy Hollinger in Paris, Nikki Tait in Brussels, Hal Weitzman in Chicago and Robin Harding in Washington
Published: January 31 2011 22:23 | Last updated: January 31 2011 22:23
Boeing’s flagship 787 Dreamliner has benefited from illegal US government subsidies that have distorted market competition, according to the World Trade Organisation.
The ruling, which will not be published for several weeks, marks a key moment in a bitter six-year trade dispute that has pitched the European Union against the US over the funding of their respective aircraft makers.
In June, the WTO ruled that Airbus, the Franco-German aircraft maker, had also benefited from illegal aid in the form of repayable loans linked to export sales in the development of its A380 superjumbo.
The two rulings will now step up the pressure on politicians from both sides to negotiate a settlement and find a new agreement on the acceptable form for state aid.
The current row, the largest trade dispute ever brought before the WTO, was sparked when the US government abandoned a previous accord hammered out in 1992.
But the arrival of new, aggressive competitors, such as Brazil and China, is making the need for common rules on the financing of new aircraft more pressing, say industry executives.
The European Commission welcomed the findings, which will remain confidential until formally published in the next few weeks. A spokesman for EU trade commissioner Karel de Gucht said it was a “solid report” that “sheds further light on the negative consequences for the EU industry of these US subsidies and provides a timely element of balance in this long-running dispute”.
Airbus claimed that the ruling found at least $5bn in US government aid illegal – much of which was channelled through the Department of Defense and the Nasa space agency.
In addition, a further $2bn in state and local subsidies were deemed unfair, the group said. The aircraft maker said the report would show that Boeing could not have launched its rival to Airbus’s A380, the 787 Dreamliner, without this illegal aid, which it claimed had cost it $45bn in lost sales.
Boeing said the report would show that the WTO had rejected almost all of Europe’s claims against the US, including the vast majority of its R&D claims. “Nothing in today’s reports even begins to compare to the $20bn in illegal subsidies that the WTO found last June that Airbus/EADS has received,” it said.
The US government also rejected the European claim of victory. Nefeterius McPherson, spokesman for Ron Kirk, the US trade representative, said the US was “confident that the WTO will confirm the US view that European subsidies to Airbus dwarf any subsidies that the US provided to Boeing.”
Both sides are appealing against the WTO’s decision last year on European aid to Airbus. They are also expected to appeal against the latest decision on US aid to Boeing. Each side will have 60 days to appeal.
Copyright The Financial Times Limited 2011
