Boeing: Illegal European launch aid and non-launch aid subsidies must end
-- Appellate ruling concludes the WTO's review, compliance must occur within 6 months
-- Ruling sets governing standards for the global aerospace industry, ensures a fair and level playing field for all companies and workers
CHICAGO, May 18, 2011 /PRNewswire/ -- The World Trade Organization's Appellate Body today confirmed that Airbus received $18 billion in illegal "launch aid" and other subsidies from European governments.
"This is a clear, final win for fair trade that will level the playing field for America's aerospace workers," said Jim McNerney, Boeing chairman, president and chief executive officer. "The WTO has concluded that launch aid and other illegal Airbus subsidies distorted the market, harmed U.S. industry and now must end. The administration—particularly the Office of the U.S. Trade Representative—and the Congress are to be commended for their long-standing efforts in this case to enforce global trade rules. We join them in calling for immediate compliance with this landmark ruling," McNerney said.
"The WTO has rendered its final verdict, and now Europe must comply within 6 months," said Boeing Executive Vice President and General Counsel J. Michael Luttig.
Altogether, the WTO confirmed that Airbus received $18 billion in illegal subsidies (principle amounts only). That includes $15 billion in launch aid, including $4 billion for the A380, without which Airbus could not have developed its fleet of airplanes. It also includes $3 billion in non-launch aid subsidies, which alone exceeds the $2.7 billion of un-remedied U.S. subsidies to Boeing (mainly NASA R&D spending) that the WTO identified in a separate ruling in March and that currently is under appeal.
"Airbus and its government sponsors have tried to justify their illegal subsidy practices by claiming that Boeing benefitted equally from government R&D contracts," Luttig said. "But the WTO in March categorically rejected that argument, dismissing 80% of the EU's claims against the United States and confirming the huge competitive advantage Airbus has as a result of massive illegal government subsidies."
Luttig stressed that Europe's obligations resulting from today's decision do not hinge on the ultimate WTO decision in the European case against the United States.
"Europe must end all practices held illegal by today's decision—particularly launch aid; government loans for the A350 and future products must be on proven commercial terms," he said.
Luttig also answered recent calls by Europe for a negotiated settlement.
"I understand why Airbus and its sponsor governments now want to negotiate. For 40 years they have relied on massive injections of launch aid, which today were confirmed to be illegal. We're not interested in a settlement that would allow a continuation of illegal launch aid—the most pernicious, market-distorting subsidy of all," he said. "Airbus currently has more than $17 billion of cash on hand. It can well afford to bring itself into compliance with the WTO ruling and thereafter develop airplanes without illegal aid from European governments."
"The WTO rules, combined with the ruling in this case, give clear guidance on what governments can and cannot do to support their respective aerospace industries. These rules will govern all market participants and help ensure that competitions are won or lost based on the merits of the respective product offerings rather than on government subsidies," he said.
http://boeing.mediaroom.com/index.php?s=43&item=1750
Airbus:
. The appeal confirms reimbursable loan instrument is legal
. None of the loans to Airbus prohibited
. None of Airbus' loans caused material injury to Boeing
. 90 percent of US claims rejected after appeal
. Time for Boeing to accept legal defeat and end masquerade
The World Trade Organization (WTO) report released today constitutes the final blow to the Boeing-sponsored myth that government support to Airbus somehow caused harm to Boeing. The WTO has now confirmed definitively that government loans are a legal instrument and that none of the government loans made to Airbus over the past 40 years were prohibited. It also reaffirms that, contrary to Boeing's repeated assertions, the subsidies did not cause any material injury to Boeing.
"It's time for Boeing to accept this legal defeat and end the masquerade. The WTO confirmation of the European loan system is a big victory for Europe," said Rainer Ohler, Airbus' Head of Public Affairs and Communications. "We see no significant consequences for Airbus or the European support system from today's decision, as the WTO has now fully and finally rejected most of the US claims. Therefore, the WTO findings are likely to require only limited changes in European policies and practices," he added.
The WTO Appellate Body rejected all of the arguments made by the US during the appeal and sided with the EU. The final result further improves on the already substantial rejection of US claims at the first stage in 2009 and now rejects 90 percent of all US claims. It also marks the end of the road for Boeing's quest to stop European government partnership with Airbus.
In particular, the WTO Appellate Body:
- confirmed that the European reimbursable loan mechanism is a legal and compliant instrument of partnership between government and industry,
- reversed the Panel's finding that three of the past government loans were prohibited subsidies, thereby finding that none of the past loans were prohibited,
- denied US claims that the full amount of a loan is a subsidy but confirmed that government loans to Airbus contain an element of a subsidy, the size of which depends on the interest rate,
- reversed the Panel's finding that government-built infrastructure used by Airbus in France constitutes a subsidy,
- reversed the Panel's finding that European R&T programmes caused harm to Boeing,
- chastised the Panel for incorrectly finding that Boeing lost market share in Brazil, Mexico, Chinese Taipei and Singapore,
- found that there was no possibility of future harm to Boeing in India,
- significantly limited the scope of the Panel's finding that Boeing lost market share in Australia, China, Korea and the EU.
These results came as no surprise to Airbus. The company has said throughout the WTO process that it expected the majority of Boeing's claims to be rejected.
Airbus noted that a separate case before the WTO has found that Boeing has benefitted from substantial illegal subsidies. That case is currently under appeal, with a final outcome expected later this year.
http://www.airbus.com/newsevents/news-events-single/detail/wto-final-ruling-decisive-victory-for-europe/news-events/
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