Economy

Boeing calls WTO ruling against EU's Airbus subsidy 'landmark decision'

Boeing calls WTO ruling against EU's Airbus subsidy 'landmark decision'

Later this year, a separate WTO compliance panel is expected to deliver its decision as to whether the US complied with the terms of a 2012 ruling against illegal USA tax subsidies that gave Boeing an unfair advantage.

Shares of Airbus reversed earlier gains to trade down as much as 1.8 percent immediately after the ruling was published. Washington alleged that European Union subsidies damaged the sales of U.S. aircraft maker Boeing.

In a direct challenge to France, Germany, the UK and Spain, Boeing said the United States Trade Representative (USTR) can now seek remedies in the form of tariffs against European imports to the US.

Those compliance issues represent the only instances where Boeing was negatively affected, according to the European Commission, which praised the appellate body's ruling.

Tuesday's finding wraps up a case against the EU dating back to 2004 and means the USA can now seek WTO backing to impose sanctions on an as yet unspecified list of European goods.

Calling it "the largest-ever WTO authorisation of retaliatory tariffs", Boeing predicted that the United States government could impose tariffs worth billions of dollars on European Union imports.

"It is long past time for the European Union to end these subsidies", he said. It said it would comply swiftly on the rest.

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Barring a negotiated deal, both sides are expected to push for billions of dollars in sanctions annually, but the amounts will depend on arbitration, expected to take around a year.

"The authorized tariffs are likely to total billions in duties per year, unless and until Airbus addresses the illegal subsidies it received from European governments for its most recently launched airplanes", the company said in a statement.

"Today's final ruling sends a clear message: Disregard for the rules and illegal subsidies are not tolerated", said Dennis Muilenburg, Boeing chairman, president and CEO.

According to the European Commission (EC), the WTO has determined "the majority of EU support to Airbus challenged by the USA had expired in 2011" and the EU is not required to take any further action regarding state support for the A300, A310, A320 and A330/A340 aircraft models. Of these, $9 billion are involved in the outstanding A350 and A380 claims.

"Boeing is now at more than 90% failed claims". For a claim to stick at the WTO, subsidies must be found not just to exist but to have caused real harm. This is proof of Boeing's cynical PR motives in bringing this case about in the first place.

But U.S. sources say the A380 aid meant Airbus was able to gamble on building the world's largest jetliner without facing the financial consequences of market failure, bolstering its balance sheet in a way that disadvantages Boeing to this day.