EU attacks US stance in Airbus-Boeing subsidy battle

US allegations that member states granted Airbus $205 billion in illegal subsidies are “completely unrealistic”, EU trade officials have said ahead of a hearing on what is expected to be the biggest-ever trade dispute in the history of the World Trade Organization.

The US case against the EU regarding alleged subsidies provided by the EU, France, Germany, Spain and the UK to the European aircraft manufacturer Airbus, is “weak” and characterised by US “inability to respond” to EU arguments and “attempts at artificially enlarging the figures involved”, European trade experts said on 24 July. 

The attack comes as US officials prepare to present their legal arguments to a WTO dispute settlement panel in a second hearing on the case, on 25-26 July 2007. The US will be seeking to prove that the four European states have awarded as much as $205 billion in illegal launch aid to Airbus over the past 30 years, enabling the company to “pursue an aggressive strategy to increase its market share” and to “launch a series of large civil aircraft models at a scale and a pace that would have been impossible without subsidies”. 

However, EU officials say that this estimate – which is double the amount that the US had challenged in a first hearing in March (EURACTIV 22/03/07) – is “completely unrealistic” and that it is based on a calculation method that is “contrary to accepted wisdom, practices and WTO subsidy rules”. They add that the methodology, if applied to American federal, state and local subsidies, would find the US guilty of $305 billion rather than $23 billion in illegal aid. 

The EU also rejected claims that the ailing Airbus, currently undergoing major restructuring (EURACTIV 02/03/07), could not have launched its aircraft programmes without the launch aid, saying that “all Airbus aircraft launched in the past 15 years could have been launched without member state financing”. 

The WTO is expected to advance a confidential interim ruling on the case in late October although the delay could be longer if the panel decides it needs more time to make up its mind. 

A separate panel will also convene on 26-27 September in order to hear the EU’s counter-challenge against alleged US support of $23.7 billion to its own aircraft manufacturer Boeing. 

The EU says it will demonstrate that “the lavish subsidies benefiting Boeing have allowed Boeing to engage in aggressive pricing of its aircraft which has caused lost sales, lost market share and price suppression to Airbus on a number of select markets”. 

But according to a US statement: “The purpose of this dispute seems clear – to divert attention from the EC’s ’embarrassment’ by creating the appearance that the United States subsidises large civil aircraft even more than do the EC and its member states.” 

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