Airbus, Boeing trade blows ahead of subsidy ruling

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Planemakers Airbus and Boeing exchanged transatlantic taunts yesterday in advance of a World Trade Organisation ruling expected to accuse the European planemaker of receiving unfair state subsidies.

Boeing and its European rival are at the centre of one of the longest and potentially most costly trade disputes in history, covering mutual accusations of illegal government support in a market estimated at $3 trillion over 20 years.

Airbus, owned by European aerospace group EADS, conceded in March that the WTO had found that loans from European governments contained “a certain element of subsidy”.

After a long wait, the findings will be released in a 1000-page report from the trade body expected on Wednesday (today).

Airbus prepared the ground for a public relations victory by Boeing, but accused its rival of “hypocrisy” over other forms of aid and urged commentators to wait for the WTO to produce its findings on a European counter-suit in the coming months.
“Our competitor can be expected to make a big propaganda splash with key words such as ‘illegal subsidies’, ‘compliance’, ‘Airbus to pay back’, ‘affordability’ and the like,” Airbus spokesman Stefan Schaffrath emailed to a group of journalists.
“This will only, once again, confirm that for them the WTO is nothing but a hook for propaganda,” he added.

Boeing was confident its key claims would be upheld in line with statements by US Congress members briefed on the report.
“Tomorrow people will see that the WTO has, according to politicians briefed on the matter, ruled that every instance of launch aid that was challenged was held to be an illegal subsidy and that $4 billion in A380 funding contained prohibited export subsidies,” said Boeing spokesman Charlie Miller.

According to sources familiar with the still-confidential ruling handed to the parties in March, a WTO trade panel called on European governments to end illegal subsidies worth billions of Euros for Airbus in a case filed years ago by Washington.

Boeing backers in Congress have seized on those findings to press their case for Airbus to be penalised in a bitterly fought $50 billion contest to supply mid-air tankers to the Pentagon.

A second WTO panel is expected to issue a preliminary ruling on a countersuit by the European Union over US support for Boeing on July 16, sources familiar with the matter said, but the findings will not be made public for several months.

Both sides have cited hundreds of examples of financial aid for the development of new airliners, from interest-free loans and military research spending to the construction of roads near factories, which they say constituted unfair state support.

Once the first report is published the parties have 30 days to decide whether to appeal, and a new ruling should be delivered within 60 days. Most analysts say the feud could drag on for several more years and may well be settled out of court.



Source: www.reuters.com