Bloomberg News

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

December 14, 2011

Dec. 9 (Bloomberg) -- The European Union has failed to halt government aid for Airbus SAS to build aircraft including the A380 after the World Trade Organization ruled the subsidies are illegal, the U.S. Trade Representative said.

The U.S. trade office today asked the EU to enter talks to resolve the dispute and sought authority to impose about $7 billion to $10 billion in countermeasures. While the trade arbiter 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 Boeing Co. 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,” U.S. Trade Representative Ron Kirk said today in a statement. The U.S. “cannot accept anything less than an end to this subsidized financing,” he said.

Boeing, which has said Airbus received $18 billion in illegal aid, said it was disappointed that the company and EU 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,” Chicago-based Boeing said in a statement. “This illegal subsidization of Airbus products -- plane after plane -- is unsustainable and must stop now.”

The 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 in the seven-year legal battle over aid to Airbus and Boeing, the world’s two biggest commercial planemakers. The report wasn’t made public.

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.

--With assistance from William McQuillen in Washington. Editors: Steve Geimann, Larry Liebert

To contact the reporter on this story: Eric Martin in Washington at emartin21@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net


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