EU to announce WTO compliance over plane subsidies

1st December 2011, Comments 0 comments

The European Union said Wednesday it will meet a WTO deadline the next day to eliminate certain subsidies for aviation giant Airbus, in the latest stage of a long-running dispute with the United States.

The World Trade Organisation gave Brussels until December 1 to comply after it found some of its subsidies caused "serious prejudice" to US interests.

"We have always said that we would honour our WTO obligations and comply fully and on time," said John Clancy, EU Trade spokesman.

"We have been working with the governments of France, Germany, Spain and UK, as well as with Airbus, on a series of steps that achieves just that.

"We will issue a public document that describes how we have achieved compliance on 1 December and transmit it to the WTO and the US."

In May, a WTO appeal body upheld findings that some EU subsidies, including launch aid, were incompatible with a specific agreement and had threatened US interests.

It also reversed a key finding that financing by Germany, Spain and Britain for the development of the A380 superjumbo amounted to an export subsidy.

Both sides claimed victory in the split decision by the Geneva-based international trade body.

The WTO findings were adopted on June 1 by the Dispute Settlement Body dealing with the case, and the EU was given six months to report back on how it intended to implement its rulings.

No comment from the WTO is expected before December 19 when a DSB session is scheduled.

US aircraft maker Boeing said it believes Airbus has benefited from 18 billion euros ($24.2 billion) of illegal subsidies, a figure dismissed as fantasy by the EU.

The Chicago-based aerospace and defence giant said the EU was continuing to subsidise Airbus despite the June 1 decision by making 3.3 billion euros available for its competitor for the development of its A350 craft.

An attorney for Boeing said Thursday the A350 subsidies violate the WTO ruling against EU subsidies in the twin-aisle plane market segment.

The question of aid for the A350 "is relevant in the context of the compliance question," Boeing's outside counsel on the case, Bob Novick, said in a conference call with reporters.

Novick said the A350 aid had not been relevant in the context of the original WTO panel because the aid had not yet been extended and there was not enough information available at the time for that specific plane.

"If you were providing money to the A330 and it was causing the distortion you say, OK, you know what, we're not going to give the A330 any more money -- we're going to give it all to a plane we're going to call the A350," he said.

"The A350 is competing for the same sales that two days ago the A330 was competing for," he added.

"This provision of launch aid for plane after plane after plane... is unsustainable."

The seven-year tit-for-tat dispute over state aid to the aviation arch-rivals is far from over, with a parallel case brought by the EU against US subsidies for Boeing still ongoing.

It remains to be seen whether the EU's compliance proposal will satisfy the US and vice-versa.

"This will be a substantial package," said Clancy.

"We expect that we receive an equally solid set of compliance measures from the United States once the WTO has finally ruled on subsidies to Boeing," he said.

© 2011 AFP

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