Airbus loses long-running trade dispute paving way for massive United States tariffs

The Appellate Body of the World Trade Organisation (WTO) has published the first of two rulings expected this year on subsidies in the large commercial aircraft dispute between the US and the European Union (EU).

As reported by the Reuters news agency, however, the Geneva watchdog dismissed United States claims that loans for Airbus's most popular models, the A320 and A330, were costing Boeing significant sales and in so doing narrowed the scope of one of the world's longest and costliest trade spats. "The EU will now take swift action to ensure it is fully in line with the WTO's final decision in this case".

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

The shares of Airbus had fallen shortly after the WTO issued its findings and were poised to close down around 0.86 percent.

But the Geneva watchdog dismissed USA claims that loans for Airbus's most popular models, the A320 and A330, were also costing Boeing significant sales and in so doing narrowed the scope of one of the world's longest and costliest trade spats.

The WTO report coincides with mounting trade tensions over USA aluminium and steel tariffs and the impact on European firms of Washington's decision to exit the Iran nuclear pact.

The ruling clears the way for what could be the largest retaliatory action in WTO history.

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The ruling, which rejected some United States claims, was a relative U.S. victory on the question of European Union aid for two aircraft: Airbus' 350XWB - a rival of Boeing's 787 - and the double-decker A380, which has eclipsed the Boeing 747 as the world's largest commercial passenger plane.

The size of USA tariffs to be allowed will be determined through a WTO arbitration process, and will be based on the annual harm to United States and Boeing - losses that the U.S. had previously pegged as ranging from $7bn to $10bn a year.

Airbus General Counsel John Harrison said: "Airbus recognizes the importance of the WTO and the Appellate Body's findings and will do what is necessary to correct any errors and this report confirms the efforts we are making".

The WTO case has yielded 5,000 pages of filings and cost tens of millions of dollars. Airbus alleges $13.7 billion in illegal tax breaks for Boeing between the 787 and 777 aircraft. Of these, $9 billion are involved in the outstanding A350 and A380 claims. According to Airbus, 94% of all original USA claims have now been dismissed by WTO. Airbus estimates the total amount of lost sales since the beginning of these disputes at over $100bn.

Boeing may lose upward of $20 billion in aircraft sales because of the US withdrawal from the nuclear pact.

"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.

The trade body also upheld an earlier finding that the European Union aid had no adverse affect on the market for single-aisle jet sales, the largest source of profit for Boeing and Airbus.

(Copyright © 2015. All Rights Reserved.)
 
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