Airbus and Boeing have both found cause to celebrate the latest ruling by the Appellate Body of the World Trade Organisation on subsidies for development of large commercial aircraft.
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 U.S. and the European Union (EU). The ruling — the latest event in a 15-year transatlantic legal battle — has once again been hailed as a victory by both sides.
In Boeing's eyes, the WTO has found that the European Union (EU) has failed to honour multiple revious rulings and has provided more than $22bn of illegal subsidies to European aircraft maker Airbus. The decision, says Boeing, ends the dispute and clears the way for the United States Trade Representative (USTR) to seek remedies in the form of tariffs against European imports to the United States.
Boeing states that the authorised tariffs are likely to total billions in duties per year, unless and until Airbus addresses the illegal subsidies it received from European governments for its most recently launched airplanes.
Airbus, on the other hand, says that the latest ruling confirms the legality of repayable launch investment for aircraft development, claiming that compliance has been fully achieved on A320 and A330, with only “minor” remaining tweaks on A380 and A350. According to Airbus, 94% of all original U.S. claims have now been dismissed by WTO.
Airbus underlines that the second WTO ruling still lies ahead. What Airbus calls “the Washington state corporate welfare scheme” has provided record breaking state-level subsidies to Boeing for the launch of the 787 ($5bn), plus a further State incentive package for the 777X valued at an additional $8.7bn in 2013. Airbus also notes that Boeing is reportedly seeking further illegal tax breaks for the planned construction of the mid-sized B797 aircraft.
Airbus says that the 787 Washington State tax breaks have been confirmed by the WTO to have caused Airbus to lose at least $16bn in sales. Airbus estimates the total amount of lost sales since the beginning of these disputes at over $100bn.