Brussels, 01/07/2010 (Agence Europe) - The final verdict of the WTO special dispute settlement body (DSB) responsible for handling the United States' complaint against Airbus subsidies (DS 316), delivered on Wednesday 30 June, considers certain government subsidies granted during 20 years to the European aircraft company as illegal, thus largely ruling in the complainant's favour. Speaking on behalf of the EU, somewhat hurt by this first final verdict on the most complex dossier handled by the WTO since its creation, the European Commission now awaits the publication, mid-July, of the final WTO ruling on the European complaint filed against state aid to Boeing (DS 354), before triggering the counter-attack.
In its 1,061 page report covering the US complaint (DS 316), the WTO considers that some European development subsidies for the A300 range constitute export subsidies banned by the WTO. The WTO therefore calls on the Commission to put an end to such subsidies immediately, i.e. within 90 days, in accordance with the regulation. More precisely, the DSB establishes that German, Spanish and British repayable launch investment for the A380 are “subsidies subject to export results” and are consequently “export subsidies” prohibited by the WTO. The DSB takes the view that some such European subsidies had a negative impact on the US aircraft industry, as Washington had bemoaned, leading to the displacement of imports for a similar product in the United States, constituting “serious prejudice” to the country's interests.
Not all the conclusions on the complaint lodged by the United States in 2004 are, however, negative for the EU, which has been whitened with respect to the A350, intended to compete with the Boeing 787. According to the DSB, the United States was unable to prove the existence of a subsidy for launching the future long haul Airbus. Neither was it established that European subsidies for Airbus had caused material injury to any branch of the US aircraft industry.
Despite the mixed verdict, the American aircraft maker, Boeing, hailed this as a major legal victory, calling on its competitor to reimburse the $4 billion in subsidies received for the A380 programme, in accordance with market stipulations, or to restructure A380 financing. At this point in time, however, the WTO condemnation has no immediate monetary effect on the loser.
Airbus, for its part, has announced that it is studying the ruling reached on Wednesday, with a view to possible referral for examination by the WTO appellate body. The European aircraft company considers that most (70%) of the US complaint had been rejected by the DSB. The Commission, however, remains cautious. “This final report needs to be read together with the forthcoming interim report on subsidies provided in the US to Boeing. Only then will we have a full and more balanced picture of this dispute. The EU remains committed to a negotiated outcome to the dispute with no preconditions on either side”, Trade Commissioner Karel De Gucht comments in a press release. According to the Commission, the special DSB panel concluded that “European support did not result in any job losses in the United States or lost profits to the US aircraft industry. The WTO panel has rejected the allegation that support for Airbus caused 'material injury' to the US aircraft industry. It has found that EU support did not damage Boeing's pricing or profitability and did not lead to a loss of jobs at the company. The panel's findings on the economic effects of Airbus' funding on the US aircraft industry are limited”.
The European mechanism of repayable launch investment (RLI) granted to Airbus is therefore, the Commission states, deemed fully compatible with WTO rules, as long as the terms of financing are based on market conditions. It nevertheless found certain RLI measures, in particular contracts dating from the 1970s and 1980s, when Airbus was being established, to have contained an element of subsidy. The EU will now closely examine the panel's recommendations on this issue, the Commission points out in a press release. The Commission, moreover, states it is “disappointed” with certain of the panel's findings - in particular its finding that part of the RLI provided for the A380 aircraft constitutes an export subsidy and that certain infrastructure measures of general nature can be classified as “actionable subsidies”.
As confirmed by Commissioner De Gucht's reaction, the EU has not yet decided whether or not to form an appeal against these conclusions, but it could do so very soon. The final WTO verdict implies that the loser should come into line with the organisation's rules “as soon as possible”, i.e. within 90 days. Failing this, complex retaliatory measures may be set in place, which could take years. In the meantime, the two parties have 60 days in which to appeal. Each of them now has its eyes riveted on the final verdict on the EU's complaint against support to Boeing (DS 354), a verdict to be given by the WTO on 16 July. There are many experts who expect the result to be a draw between the two aircraft companies, which might therefore be compelled to find an agreement. (E.H./transl.jl)