The World Trade Organization (WTO) has confirmed that Airbus, Europe’s largest aircraft manufacturer, received illegal government subsidies for the development of new aircraft and that this harmed Boeing, its US competitor.

In a decision made public yesterday (18 May), the WTO appeals panel upheld a ruling that Airbus had received illegal export subsidies for the launch of Airbus A380. The panel overturned earlier findings that Germany, Spain and the United Kingdom had provided export subsidies, which are illegal under world trade rules.

The European Union appealed against the original ruling in July last year.  It now has six months to cancel the subsidies or address their effects.

Both sides claimed victory after yesterday’s appeals ruling, which is the latest instalment in a trade dispute dating back to 2004. The WTO has yet to rule on an appeal against a decision that the United States provided illegal state aid to Boeing.

Ron Kirk, the US trade representative, said: “The WTO appellate body has confirmed without a doubt that Airbus received massive subsidies for more than 40 years and that these subsidies have greatly harmed the United States, including causing Boeing to lose sales and market share in key markets throughout the world.”

He said the ruling will “significantly benefit the US aerospace industry and American aerospace workers” and that it reaffirmed the need for “fairness and accountability in the global race for aerospace business”.

Jim McNerney, Boeing’s chairman, president and chief executive officer, said that the ruling was a “clear, final win for fair trade that will level the playing field for America’s aerospace workers”.

The European Commission also issued a statement claiming victory. “The appellate body has overturned several key findings,” it said. “Most importantly, the appellate body found that support provided by Germany, Spain and the UK for the launch of Airbus’s A380 aircraft is not a prohibited export subsidy under WTO law.”
 
Tom Enders, the president and chief executive of Airbus, said yesterday’s ruling was a “big win for Europe”. “It is good to see that the WTO has fully green-lighted the public-private partnership instruments with France, Germany, Spain and the UK,” Enders said. “We now can and will continue this kind of partnership on future development programmes.”

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