WTO says European Union has failed to comply in Airbus subsidies dispute

by Ben Pena September 23, 2016, 0:44
WTO says European Union has failed to comply in Airbus subsidies dispute

U.S. Trade Representative Michael Froman said the subsidies had cost U.S. workers exports worth tens of billions of dollars. While Brussels claimed the European Union had subsequently stopped that practice, the U.S. disagreed and requested a compliance panel to intervene.

Airbus said the WTO had confirmed its public-private partnership model is acceptable under global trade law.

But no reprisals are expected until the WTO process, which is already running about three years behind schedule, has been exhausted, which trade sources say could take months or years.

"After any appeal of today's compliance ruling, the next step for the USA government is to obtain WTO authorization to impose billions in retaliatory duties".

"We are closely analysing the report", the European Commission said, adding the 574-page document should be read in the context of two other WTO reports expected to address USA subsidies to Boeing in coming months.

Sen. Patty Murray, D-Wash.: "This ruling is so important to my home state of Washington and to all the American workers who show up every day in this country to build world-class products".

The two sides settled a previous dispute over subsidies in 1992, but the US walked away from that deal in 2004, arguing Airbus had an unfair advantage. The EU first raised the issue with the WTO in late 2014.

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This is the largest trade ruling from WTO in history -- and they have sided with US manufacturers. The planemaker said the report confirmed that Europe's chosen method of partnering with its large civil aircraft industry is acceptable under worldwide trade law.

U.S Trade Representative Michael Froman declared the ruling a "sweeping victory".

In June 2011, the World Trade Organization found that the European Union and four of its member countries provided billions of dollars in subsidized financing to Airbus.

The Geneva-based trade adjudicator also said that Airbus received subsidies for its new A350XWB long-range plane, though it rejected the USA claim these were "prohibited subsidies" that have to be remedied expeditiously. "Without having to compete against illegal, market-distorting practices, Boeing should win more sales around the world".

The compliance panel ruled mostly in Boeing's favor, including on some subsidies for the A350 XWB.

In the twin-aisle market, which includes Boeing's 767, 777, and 787 planes, the panel found that the subsidies benefiting Airbus's A330, A340, and A350 XWB caused displacement or impedance of Boeing aircraft in the EU, Chinese, Korean and Singaporean markets, as well as lost sales of 50 Boeing aircraft, the USTR said. We will address the few still remaining points indicated by the report in our appeal.

In its ruling, the WTO said that "the European Union and certain member States have failed to implement the recommendations and rulings of the DSB (Dispute Settlement Body) to bring its measures into conformity with its obligations" under global trade rules.

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