Published: Wed, May 16, 2018
Global | By Marsha Munoz

WTO rules Boeing harmed by Airbus subsidies, exposing European Union to U.S. sanctions

WTO rules Boeing harmed by Airbus subsidies, exposing European Union to U.S. sanctions

It said that tariffs could be in place as early as 2019 and were expected to be the largest-ever WTO authorisation of retaliatory tariffs.

The decision by the WTO's appellate body comes as the Trump administration has exerted intense pressure on the Geneva-based organization over what the president alleges is its "unfair" treatment of the U.S.

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 USA aircraft manufacturer Boeing, according to a press release by Boeing on Tuesday.

But the WTO still has to make a final ruling on separate allegations from the European Union that Boeing was provided illegal subsidies from the USA government.

Later this year, a separate WTO compliance panel is expected to deliver its decision as to whether the USA complied with the terms of a 2012 ruling against illegal US tax subsidies that gave Boeing an unfair advantage.

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Boeing says Airbus received illegal aid worth $22 billion, including $18 billion in loans from governments.

On today's ruling, both manufacturers are claiming victory.

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

The final decision upholds an earlier ruling by the trade body. "Significantly, it dismissed the vast majority of the USA claims that this support had damaged Boeing's aircraft sales".

The European Commission argued that the WTO decision rejected most USA claims and was its victory.

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"Despite Boeing's rhetoric, it is clear that their position today is straightforward healthy: they have half the market and a full order book, they have clearly not been damaged by Airbus repayable loans", Airbus CEO Tom Enders said.

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

The WTO panel found that Airbus hasn't been in compliance with some of the trade body's rules since 2011.

However, the amounts will depend on arbitration, expected to take around a year. If we infer that those percentages refer to the more than $22 billion in damages that Boeing claimed in suffered, Airbus is a clear victor.

"Companies should not have to compete with governments - that is what this case is about", said Robert Novick, co-managing partner at Boeing's trade lawyers WilmerHale. Without that, the additional loan repayment penalties, potential tariffs and public perception scorecard will put the European company at a significant disadvantage in its stated goal of dethroning the American company as the world's top aerospace company.

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