By failing to demonstrate that its support for Airbus has been brought into line with the World Trade Organisation (WTO), the European Union suffered a further defeat on Monday 2 December in its dispute with the United States.
A WTO panel concluded that the EU and four of its Member States (Germany, Spain, France and the United Kingdom) had not complied with their obligations.
This failure cancels any hope that the countermeasures imposed by Washington since 18 October will be reduced. European products are affected by tariffs of 10 to 25% of up to 6.7 billion euros (see EUROPE 12352/16, 12350/17, 12348/7).
This is the second rejection the EU has received. If the latter considers that the amount determined by the WTO arbitrator in this dispute is disproportionate to the level of its current support, it has not succeeded in convincing the WTO judges that its subsidies should be brought into conformity. Eighteen of them, mainly loans granted to finance the A380 and A350-XWB aircrafts, are still pinpointed. Discontinuing the A380 wide-body aircraft programme also did not convince the multilateral arbitrator.
Small compensation: some European support for research and technological development, challenged by Washington, was said to have not been rejected.
The EU could appeal
The panel report shall be adopted by the Dispute Settlement Body within the next 30 days, unless a party to the dispute appeals.
"We consider that the panel has made a number of serious legal errors in its assessment of EU compliance", a Commission spokesperson told EUROPE.
In particular, the report contains practical solutions to comply with WTO rules on subsidies that would be "very problematic for a larger part of the WTO membership to comply with", the Commission believes.
At this stage, it therefore does not exclude appealing "to have these legal errors corrected", confirmed the spokesperson, while again assuring that it remains open to the identification of a negotiated solution with Washington (see EUROPE 12348/7).
It remains to be seen whether the Appellate Body (AB) of the dispute settlement mechanism can effectively complete its work, given its functional paralysis set to start as of Wednesday, 11 December.
For Airbus, the WTO panel's findings show that the United States must reduce the tariff barriers imposed in October by US $2 billion. (Original version in French by Hermine Donceel)