Bloomberg News

EU Says It’s Terminated Launch-Aid Deals in WTO Airbus Case

December 05, 2011

(Adds case background starting in fifth paragraph.)

Dec. 2 (Bloomberg) -- The European Union said it secured repayment of so-called launch aid loans to Airbus SAS and terminated all related accords to comply with a World Trade Organization ruling that such payments break global rules.

WTO judges said in June 2010 that loans from EU governments including Spain, the U.K., France and Germany were unfair subsidies that had an adverse effect on Airbus’s U.S. rival, Boeing Co. While the Geneva-based WTO can’t force nations to scrap illegal aid, it can authorize sanctions against governments that fail to comply with its rulings.

The EU said in its compliance report today that it had raised fees and lease payments on infrastructure support to meet market principles and ensured that capital contributions and regional-aid subsidies have “come to an end.” The EU said its measures affect Airbus’s A300, A310, A320, A330, A340 and A380 aircraft “as well as derivatives thereof.”

“As a result of these steps and other intervening market events, the European Union has addressed the forms of adverse effects covered” by the WTO ruling, according to the report.

Boeing declined to comment on the report and referred to its statement yesterday that said the EU would be in compliance with WTO rules only if it scrapped launch aid. The U.S. Trade Representative also declined to comment.

The document was submitted to the U.S. and the WTO yesterday in the seven-year legal battle over aid to Airbus and Boeing, the world’s two biggest commercial planemakers. Boeing has said Toulouse, France-based Airbus received $18 billion in illegal subsidies, including $15 billion in launch aid, while the EU has called that a “fantasy figure.”

Boeing Subsidies

A WTO panel concluded in March that Chicago-based Boeing received at least $5.3 billion in illegal U.S. support, unfairly tilting the $70 billion civil-aviation industry. Both the EU and U.S. appealed that judgment.

The two WTO panel reports finding that both aircraft makers got illegal subsidies may establish industry-defining guidelines for government support that become even more important as competitors from China, Russia, Brazil and elsewhere emerge.

The U.S. and Europe filed counter-cases at the WTO in 2004 after the administration of President George W. Bush unilaterally walked out of a 1992 aircraft-aid accord with the EU. Boeing lost its industry lead to Airbus, a unit of European Aeronautic, Defence & Space Co., in 2003.

--Editors: James Hertling, Jeffrey Donovan

To contact the reporter on this story: Jennifer M. Freedman in Geneva at jfreedman@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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