EU Fails to Withdraw Airbus Aid After WTO Ruling, U.S. Says

14/12/2011 12:00 - 365 Views

The European Union has failed to halt government aid for Airbus SAS (EAD) to build aircraft, including the A380, after the World Trade Organization ruled the subsidies are illegal, U.S. Trade Representative Ron Kirk said.

Kirk today asked the EU to start talks to resolve the dispute and sought authority to impose $7 billion to $10 billion in counter-measures. While the WTO can’t force nations or companies to scrap illegal aid, it can authorize sanctions for failure to comply with rulings.

WTO judges in Geneva ruled in June 2010 that EU nations including Spain, the U.K., France and Germany provided illegal subsidies to Airbus in the form of launch-aid loans, infrastructure support and equity infusions that had an adverse effect on Chicago-based Boeing Co. (BA) The EU said on Dec. 1 that it had complied with the ruling.

“The WTO clearly found that every single grant of launch aid to Airbus, for every single aircraft that company produced, was a WTO-inconsistent subsidy that caused unfair adverse effects to U.S. industry and jobs,” Kirk said in a statement. The U.S. “cannot accept anything less than an end to this subsidized financing.”

Boeing, which has said Airbus received $18 billion in illegal aid -- a figure the EU rejects -- said it was disappointed that the company and European officials failed to comply and praised U.S. efforts to remove all illegal government subsidies to Airbus.

‘Must Stop Now’

“Despite the very clear WTO ruling, EADS/Airbus and European governments have failed to remove outstanding subsidies,” Boeing said in a statement. “This illegal subsidization of Airbus products -- plane after plane -- is unsustainable and must stop now.”

Stefan Schaffrath, a spokesman for Toulouse, France-based Airbus, dismissed Boeing’s comments.

“Boeing has made a lot of claims and requests since the beginning of this dispute, and none of them proved to be true,” he said in an e-mailed statement. “Calling for sanctions is just another one of those empty claims. It is time for the WTO to review and assess the implementation presented by the EU. Airbus is confident it has addressed WTO demands in a comprehensive manner.”

WTO judges concluded in March that Boeing received at least $5.3 billion in illegal U.S. support, unfairly tilting the $70 billion civil-aviation industry.

The EU’s compliance report was submitted to the U.S. and the WTO on Dec. 1 as part of the seven-year legal battle over aid to Airbus and Boeing, the world’s two biggest commercial planemakers.

In an interview at Bloomberg’s headquarters in New York on Nov. 30, EU Trade Commissioner Karel De Gucht said the body is dealing with subsidies “on all models that are the topic of this litigation.”

“We are comfortable that this is a substantive response to the requirements that the WTO put on us,” he said.

By Eric Martin

Source: Bloomberg.com