Europe claims victory in Boeing subsidy row

16th September 2010, Comments 0 comments

European leaders claimed victory on Wednesday after the World Trade Organization was said to have judged massive US subsidies to Boeing illegal.

The report, which has not been published, reportedly stated that billions of dollars in US aid to the aircraft manufacturer were illegal, prompting officials from the European Union, France and Boeing's arch-rival Airbus to claim victory.

"Boeing benefits from billions of dollars in government subsidies that have been judged illegal by the WTO," said Airbus spokesman Rainer Ohler.

European Union trade commissioner Karel De Gucht said the WTO findings "support the EU's view" of the decade-long dispute.

The complaint was brought to the WTO by the European Union, part of a long-running transatlantic spat over subsidies to the aerospace sector.

It came a year after the WTO rapped the EU for illegally providing subsidies to Airbus, a unit of the European Aeronautic Defence and Space Company.

Under WTO rules, the interim ruling is meant to be held confidential until the global trade body publishes the full report by its panel of dispute settlement arbitrators.

But both sides were keen to spin their version of events as details poured into the public domain.

In a statement Boeing said the World Trade Organization had issued a "massive rejection" of European claims that it received tens-of-billions of dollars in illegal subsidies.

"If today's reports are accurate that some three billion dollars of the EU's claims were upheld by the WTO... then the ruling amounts to a massive rejection of the EU case," the firm said.

"Nothing in today's public reports on the European case against the US even begins to compare to the 20 billion dollars in illegal subsidies that the WTO found last June that Airbus/EADS has received."

The EU had claimed Boeing received about 23 billion dollars of subsidies masked as defence research.

But there was some hope that the ruling could pave the way for a deal to end the often bitter dispute over aid.

Airbus called on its US rival to end the row and negotiate new funding rules for the aerospace industry.

"Now that both reports are available, it's time to stop blaming each other and to start assuming our responsibilities," said Airbus's Ohler.

"It's only when we stop these contentious suits and start negotiations that we'll be able to define new equitable rules of the game which will govern the future of the world's aerospace industry, a matter which is much more important than a transatlantic dispute," he added.

The EU likewise insisted that only negotiations at the highest political levels could resolve the acrimonious spat over US and EU state support, which has dogged the two biggest players in the aerospace industry, Boeing and Airbus, since 2004.

"Only negotiations at the highest political level can lead to a real solution," said European Union trade spokesman John Clancy reiterating the EU position that the new report "provides momentum in that direction."

He referred to earlier findings on the parallel case against Airbus and noted that "today's ruling provides us with the second half of the story.

"The EU appealed to those findings (and) while litigation continues in both cases, we today have a clearer picture of where the two parties stand," Clancy said.

Brussels brought its case to the WTO on October 6, 2004 -- the same day that Washington complained against EU subsidies to Airbus. It had therefore been frustrated by the time lag between the rulings on the two cases.

An aviation analyst who declined to be named said that a ruling against Boeing "would be the most direct route towards a negotiation to end this affair."

"It is in their interest to end this war and to concentrate instead on the development of their aircraft because competitors are closing in on mid-sized carriers," he added.


© 2010 AFP

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