Airbus subsidies illegal, WTO rules

The European Union and several EU member states have provided billions of euros in illegal subsidies to Airbus for 40 years, the World Trade Organization (WTO) has found.

The ruling by a WTO dispute settlement panel, which was made public yesterday (30 June), concluded that so-called ‘launch aid’ provided by Germany, Spain and the United Kingdom for new Airbus models, and other forms of aid provided by France and the EU, constitute illegal subsidies that harmed Airbus’s main competitor, the US airplane manufacturer Boeing.

“These subsidies have greatly harmed the United States, including causing Boeing to lose sales and market share,” said Ron Kirk, the US trade representative. “Today’s ruling helps level the competitive playing-field with Airbus.”

The US government had lodged the complaint with the WTO in October 2004, prompting a counter-claim by the European Commission. The ruling on the legality of US subsidies to Boeing is expected later this year.

“This final report needs to be read together with the forthcoming interim report on subsidies provided in the US to Boeing,” Karel De Gucht, the European commissioner for trade, said. “Only then will we have a full and more balanced picture of this dispute. The EU remains committed to a negotiated outcome to the dispute with no pre-conditions on either side.”

The Commission maintains that support by the EU and member states did not cause material injury to Boeing and did not damage its profitability.

Both sides have 60 days to appeal against the ruling. Once the ruling has been confirmed, the EU and the governments concerned have 90 days to withdraw subsidies that have been ruled illegal.