United States threatens sanctions after trade body rules against Airbus

Darnell Taylor
May 16, 2018

A final ruling by the World Trade Organization (WTO) that the European Union illegally helped Airbus with $22 billion in subsidies authorizes the United States to impose retaliatory tariffs to recover losses suffered by U.S. aircraft manufacturer Boeing, according to a press release by Boeing on Tuesday.

"After examining this case for more than a decade, the WTO has determined the European Union must end its unfair business practices and remedy the ongoing harm caused by the illegal subsidies", Boeing said. Full details to come.

"The commercial success of products and services should be driven by their merits and not by market-distorting actions", Muilenburg said.

The WTO's findings mark a stepping up of trade tensions between the U.S. and European Union, which are already wrangling over whether United States tariffs on aluminium and steel will apply to European products.

The size of US tariffs to be allowed will be determined through a WTO arbitration process, and will be based on the annual harm to USA and Boeing - losses that the US had previously pegged as ranging from $7 billion to $10 billion a year.

The EU's Executive Commission said most of the aid faulted in earlier rounds of the long-running case had expired in 2011 and that it would swiftly comply on the remaining measures.

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However, the Geneva watchdog dismissed USA claims that loans for Airbus's most popular models, the A320 and A330, were costing Boeing significant sales and in so doing narrowed the scope of one of the world's longest and costliest trade spats.

Shares of Airbus reversed earlier gains to trade down as much as 1.8 percent immediately after the ruling was published.

The WTO dismissed an appeal by Airbus saying, the European plane maker had failed to fix the harm done to Boeing.

"The result is simple: Airbus pays back its loans, Boeing pays back nothing and continues to exploit the generosity of the US taxpayer", outgoing Airbus CEO Tom Ender said.

Deciding on a case first opened in 2004, the appellate body found Airbus paid a lower interest rate on financing to develop the A350XWB aircraft than it would have gotten in the open market. Boeing fell less than 1 percent to $342.09 at 12:37 p.m.in NY, recovering from losses logged before the decision was issued.

The U.S. and the European Union have spent more than a decade wrangling over various government efforts to help Chicago-based Boeing and Toulouse, France-based Airbus defray billions of dollars in costs to design and produce commercial aircraft.

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