The EU Appeals Findings of the WTO Compliance Panel in Airbus case
(Source: European Commission; issued Oct 13, 2016)
In its report of 22 September 2016, the panel sided with the EU as regards some points of the dispute. It confirmed among others that there have been no prohibited subsidies granted to Airbus A350 XWB or A380 models, and that most of the other subsidies challenged by the US had come to an end.
However, significant aspects of the compliance panel report cannot be regarded as satisfactory.
The EU in particular disagrees 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 rates. The EU disagrees with some of the elements proposed by the panel to determine such a market benchmark.
Also, the EU considers that the panel made several errors in its assessment of the alleged harm that these subsidies caused to Boeing.
It should also be clarified that 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 present appeal should be seen in the context of two on-going WTO challenges brought by the EU against billions of US subsidies to Boeing for its aircraft production.
The Boeing case runs in parallel to the Airbus case, and the final report as to whether the US complied with its WTO obligations following the WTO ruling against its subsidies is expected in the coming months.
The second case against the US subsidies was launched more recently targeting new massive additional subsidies by Washington State of an estimated amount of USD 8.7 billion - the largest subsidy for the civil aerospace industry in US history. The latter case - where the panel report is due end of 2016 - concerns WTO-prohibited subsidies and as such runs under expedited procedure.
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EU Fights WTO Ruling On Airbus Subsidies
(Source: Deutsche Welle German radio; posted Oct 13, 2016)
The European Commission on Thursday appealed a decision by the World Trade Organization that found the EU guilty of providing illegal subsidies to Airbus after investigations called for by the European plane maker's US rival, Boeing.
"The EU in particular disagrees with the legal conclusion that - even though most of the subsidies challenged by the US have ended - the bloc has not fully complied with the previous ruling," the Commission said in a statement.
The WTO appeals panel said on September 22 that the EU had not taken steps it had ordered in 2011 to withdraw several support and subsidy programs for Airbus. Boeing had said those subsidies amounted to $22 billion (20 billion euros) worth of illegal support, coming mostly in the form of subsidized loans.
No quick fix?
The EU's appeal came a day before top US trade officials were to visit the WTO to defend Boeing against what the company called unfair competition from its European rival.
"We will not tolerate our trading partners ignoring the rules at the expense of American workers and their families," US Trade Representative Michael Froman commented.
Boeing had claimed that as a result of the WTO's September ruling, the US could now levy retaliatory duties against the EU of up to $10 billion a year.
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