France, Airbus say WTO rules against Boeing in subsidy row

15th September 2010, Comments 0 comments

France and European aircraft manufacturer Airbus said Wednesday the World Trade Organization had ruled that US subsidies paid to Boeing were illegal, citing an interim finding on a multi-billion dollar complaint brought by the European Union.

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

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.

The much-awaited ruling, effectively the second part of a tit-for-tat dispute, came a year after the WTO rapped the EU for illegally providing subsidies to Airbus, the maker of the A380 superjumbo.

The WTO said its latest confidential report by its disputes settlement panel had been handed to the parties. The EU confirmed reception although it would not disclose the 750 page report's findings.

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.

The French transport ministry, however, claimed victory.

"Without going into the details, the summary of the panel's conclusions criticises the massive subsidies received by Boeing which violate WTO rules and finds in favour of the essence of the European Union's complaint," the transport ministry said.

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

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

"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.

European Union trade spokesman John Clancy also reiterated the EU position that "only negotiations at the highest political level can lead to a real solution" and expressed the hope in Brussels 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 very 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 earlier that a ruling against Boeing in the dispute, "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.

The EU complaint accuses Washington of violating international trade rules by funnelling subsidies to civil aviation through military research funds.

About 23 billion dollars of subsidies for Boeing were masked as defence research, Brussels claimed.

But Boeing, the maker of the new 787 Dreamliner, has insisted that the US support is above board.

It also accused the Airbus of maintaining controversial "launch aid," some of which was found illegal by the WTO in its earlier ruling in the case.

"To date, Airbus and its government sponsors have defiantly resisted abandoning launch aid," Boeing has said, adding that it expected Airbus to "make good on their end of the WTO bargain."

The EU has appealed against the WTO's earlier ruling against aid for Airbus.

© 2010 AFP

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