On Thursday 13 October, the EU appealed against the findings of the WTO panel assessing EU compliance with an earlier ruling in the EU-US dispute over support to the European aircraft manufacturer, Airbus (DS 316) published on 22 September 2016 (see EUROPE 11631).
In the findings, the WTO panel ruled that the EU had not complied with its previous verdict because it continued to pay subsidies to Airbus in the form of loans that led to lost sales for US aircraft manufacturer Boeing and generated serious damage to the United States’ interests (see EUROPE 10587).
The EU is pleased that the WTO panel did not go along with US claims that repayable aid for developing the mid-sized A350 XWB and the large A380 were unlawful subsidies. It is also pleased that the WTO panel said that all previous reimbursable aid for other aircraft, such as the A320, have come to an end.
In a press release, the EU criticises a number of the panel’s findings, disagreeing in particular with the legal conclusion that, even though most of the subsidies challenged by the US have ended, the EU has not yet fully complied with the previous ruling.
The EU finds that the compliance panel did not correctly define the elements that would determine whether the loans to Airbus for the A350 XWB model were subsidised. This determination would be based on comparison of the interest rate charged to Airbus under the public loan scheme with a market benchmark rate. The EU disagrees with some of the elements proposed by the panel to determine such a market benchmark, explains the Commission.
The EU considers that the panel made several errors in its assessment of the alleged harm that these subsidies caused to Boeing.
The EU says: "The figure of $22 billion that has recently been cited in the press is a reflection of the face value of all repayable loans granted to Airbus and has nothing to do with the actual amount of subsidy. The WTO has unequivocally ruled that repayable loans in themselves are not subsidies. Any subsidy element would consist only of the differential between the interest paid by Airbus and the market rate, and it is absolutely clear it will not amount to anywhere close to 22 billion".
The WTO verdict on the EU’s compliance with a WTO ruling on a compliant by the United States about aid for Airbus (DS 316) should be seen in the wider context of two other WTO decisions expected shortly about the EU’s complaints against US aid for Boeing, explains the Commission.
A report is awaited in the next few months on the US’ compliance with a WTO ruling on an EU complaint about aid for Boeing (DS 353), and also an EU complaint about new massive additional subsidies by Washington State of an estimated amount of US$ 8.7 billion – the largest subsidy for the civil aerospace industry in US history, explains the Commission. This ruling is expected at the end of 2016, the Commission adds. (Original version in French by Emmanuel Hagry)