The World Trade Organisation WTO has considered EU subsidies illegal for Airbus. The EU did not implement recommendations and judgments of dispute schlichtungsausschusses, it was said in judgment. The subsidies would have continued to exist and had negative consequences for or side.
According to WTO rules, United States can now take countermeasures, according to trade experts in Geneva. The highest WTO arbitration tribunal had already partially granted US action in case of subsidies to Airbus in last instance in 2011 and made recommendations for EU to remove disputed subsidies. Specifically, it is about start-up financing of various EU governments, including Germans, for production at Airbus. Now it was a question of wher EU had implemented verdict.
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The decision is not contestable. Boeing complained WTO’s decision as a victory for itself. “Today’s final verdict sends a clear message: disregard of rules and illegal subsidies will not be tolerated,” said Boeing chief Dennis Muilenburg. As a result of decision, Boeing believes that US government should be authorized to levy billions of dollars on EU products as compensation.
Airbus also considered decision to be an “important legal success”. Only a few adjustments to repayable EU loans for development costs were needed, said chief lawyer John Harrison. Airbus will do everything necessary to correct any errors. However, CEO Tom Enders referred to a report on US subsidies to Boeing to be presented in second half of year.
“We expect him to go into court with Boeing subsidy policy, and n we will see how it looks bottom line,” said Enders. In his view, possible US sanctions should be “low compared to what we expect in European action against Boeing.”
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The dispute between US and EU on behalf of world’s largest aircraft manufacturers, Airbus and Boeing, has now been in existence for 14 years and went through all WTO instances. The US and EU are distorting each or’s competition. The EU, for its part, has also sued US for illegal subsidies to Boeing. In that case, a final judgment is still pending.
In both cases, WTO arbitrators had assessed both Airbus and Boeing measures as illegal subsidies. However, decisions only contain recommendations to defendant on how y can bring ir trade measures into line with WTO rules. Practically y are almost unenforceable. The WTO does not have a hard opportunity to sanction.
Experts see resolution of dispute in a contract in which both sides negotiate permissible support for ir respective aerospace industries. There was such a thing in Nineties, but treaty was terminated by United States.
