US to press WTO to enforce ruling on Airbus subsidies

Airbus A380. [Roger Schultz / Flickr]

The Obama administration said on Monday (3 October) that it will press the World Trade Organisation to enforce a panel report that found the European Union guilty of maintaining illegal subsidies to Airbus.

The US Trade Representative plans a special meeting at the WTO on October 14 as it defends US aircraft producer Boeing’s market position against what it calls unfair competition from its European rival.

That follows the September 22 finding of a WTO appeals board that the European Union failed to end illegal subsidies for Airbus.

Europe faces $10bn in retaliatory duties after WTO ruling in Airbus case

The US and Boeing declared victory after the Word Trade Organisation concluded yesterday (22 September) that subsidies for aircraft maker Airbus were illegal. However, the US said it was “ready to negotiate” before slapping retaliatory duties.

The US wants the WTO to formally adopt the appeals panel’s findings, and “will press for the rapid enforcement of those findings in a special meeting of the WTO’s Dispute Settlement Body,” the US Trade Representative’s office said in a statement.

“We will not tolerate our trading partners ignoring the rules at the expense of American workers and their families,” said Michael Froman, the US trade representative.

“We need to resolve these disputes once and for all.”

The WTO appeals panel, ruling in the dispute dating back to 2004, said that the European Union had not taken the steps ordered by the WTO in 2011 to withdraw several support and subsidy programs for Airbus.

The WTO did not give a value to those programs, but Boeing said they amounted to $22 billion worth of illegal support for Airbus development and sales.

Boeing also claimed that as a result of the September 22 ruling, the United States could now levy retaliatory duties against the European Union of up to $10 billion a year.

At the time, the European Union said it found some of the WTO findings “unsatisfactory” and noted it had the right to appeal the ruling.

It also pointed out that the WTO is likely to rule in the coming months on EU and Airbus complaints about what they say is illegal US support for Boeing.

Washington has said it is ready to negotiate a solution over the broader dispute.

But Froman said in a statement that the US “is strongly committed to enforcing the rights of the United States under our trade agreements and we will use every tool at our disposal to expedite these cases for the benefit of American businesses and workers.”

Background

The EU and the US have been locked in a dispute over state aid to large commercial aircraft builders Airbus and Boeing since Washington and Brussels filed complaints against one another in 2004.

According to international trade rules, government support for manufacturing is illegal if it can be proven to harm the companies or industries of another World Trade Organisation (WTO) member state.

The US and Boeing declared victory after the Word Trade Organisation concluded on 22 September that subsidies for aircraft maker Airbus were illegal. However, the US said it was “ready to negotiate” before slapping on retaliatory duties, which could amount to $10 billion.

An earlier judgement in 2011 partially overturned accusations that EU states had given Airbus illegal subsidies to develop the world’s largest jetliner, the A380, but said the aircraft maker did receive billions of dollars of unfair aid that harmed Boeing.