WTO set to publish ruling on Boeing subsidies

30th March 2011, Comments 0 comments

The World Trade Organisation is due Thursday to publish its verdict on decades of state support for US aircraft maker Boeing amid EU claims of a multi-billion dollar dent in sales for rival Airbus.

The ruling, a second key part in the bruising dispute between two of the world's biggest trading powers and their dominant aircraft makers, was released confidentially to US and EU authorities on January 31.

Both Airbus and Boeing, who have been engaged in a tit-for-tat battle challenging their respective subsidies since 2004, have claimed victory, although their claims could not be verified as the WTO's findings have not yet been publicly released.

Airbus has claimed that the complex ruling vindicated its complaint that Boeing had received "massive and illegal" subsidies, sometimes in the form of defence or space contracts, that helped the company develop top-selling civil airliners such as the new 787 "Dreamliner".

The European aircraft maker, part of the European Aeronautics Defence and Space Company (EADS), estimated that illicit US subsidies amounted to at least $5 billion, causing $45 billion of lost sales between 2002 and 2006.

However, Boeing has described the ruling by the WTO dispute settlement panel as a "sweeping rejection" of EU claims it had received illegal subsidies.

While it hinted that claims against about $2.6 billion of subsidies may have been upheld, it insisted that the findings did not include "the vast majority of its R&D (research and development) claims" made by Brussels.

Boeing said that the amounts paled in comparison with "$20 billion in illegal subsidies" that the WTO found last June that Airbus/EADS had received.

Brussels and Washington have also been locked in a parallel but linked dispute over European subsidies for Airbus.

A WTO ruling last June partially upheld Washington's complaint in that dispute and both sides have already lodged an appeal.

It accepted three out of seven claims by Washington that key launch aid amounted to export subsidies which are illegal under WTO rules, notably through loans at interest rates below the market rate.

Experts believe both sides will eventually be found to be at fault to some degree and be obliged to restructure some state support and strike an agreement to end the dispute.

Boeing executives have suggested that the WTO rulings would also help draw a red line showing the maximum degree of state support that upcoming rival aircraft makers from emerging economies such as China or Brazil could implement.

© 2011 AFP

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