European Union loses bid to undo the WTO Airbus ruling

Clay Curtis
December 3, 2019

US Trade Representative Robert Lighthizer said the decision affirmed that European subsidies to Airbus continued to harm the US aerospace industry, and strong action was required to eliminate such market-distorting subsidies.

In a statement on Monday, Airbus touted this aspect of the WTO panel's finding, which essentially once again went against the European aviation company's arguments in one of its many disputes with rival Boeing before the world trade body, Efe news reported.

In October of this year, the USA imposed a record $7.5 billion (€6.8 billion) in levies on annual European Union imports as part of its case against Airbus.

That is because Airbus finds the panel that "loans for the development of the A380 no longer have any influence on Boeing sales and that the value of the lost sales therefore no longer exists".

The EU accused the WTO on Monday of "serious legal errors" in the case, the FT reported.

Boeing shares were down 1.44% at $360.90 at the time of publication.

The Commission, with Irishman Phil Hogan leading trade policy since Dec 1, said it would consider its next steps, including a possible appeal, while seeking an overall agreement on aircraft subsidies with the United States. There have been no immediate comments by Brussels or the plane maker in regards to the emerged reports.

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The recent findings may inspire the WTO to reduce the US tariff cap, calculated to reflect damage to Boeing, from $7.5 billion to $5.5 billion, according to Reuters.

They did not immediately say whether the finding against the A350 would change the equation in the opposite direction.

U.S. sources said only full compliance or a political settlement - which is widely seen as remote amid fragile economic ties - could legally cancel WTO approval for tariffs.

It was the United States that first filed a case with the WTO in 2006 claiming that Airbus, which is jointly owned by Germany, France, Spain and Britain's BAE Systems, had received $22 billion (€19.4 billion) in illegal subsidies.

The WTO Appellate Body, which hears appeals, will cease to function after December 10 due to USA blocking of new appointments, leaving a tight deadline to challenge Monday's ruling.

Officials on both sides have expressed support for a negotiated settlement, while accusing the other of failing to take the prospect of a negotiated solution seriously.

Any appeals launched after that date risk falling into a legal void, while it remains unclear whether the Appellate Body will be allowed to rule on appeals filed before then. As part of their complaints, the WTO has found that both the European Union and the United States were giving improper subsidies.

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