EU Plays Down WTO Ruling on Airbus Aid

The European Union has poured cold water on reports out Friday (4 September) that the World Trade Organisation had sided with the US in a long-running dispute over subsidies to Airbus (EAD.PA), the European aviation consortium.

Member state officials said the confidential interim report was much more nuanced than a simple one-sided victory, while EU trade spokesman Lutz Guellner described it as "only half the story."

However, US officials said their claims had been vindicated.

"For many years, we have contended that direct financial assistance from the European governmental partners of Airbus has represented an unfair launch," said US representative Norm Dicks, according to the BBC.

"Today's interim ruling from the WTO panel definitively confirms that contention," added the representative from Washington state, where Boeing (BA) is based.

The US filed a complaint with the WTO in October 2004, claiming €10.5 billion ($15bn) given by EU governments to Airbus in the form of loans for the development of the A380 and other aircraft constituted illegal subsidies. The loans date back as far as 1970.

A final decision on the case – the biggest and most expensive in the WTO's 14-year history – is unlikely before next year.

Negotiated deal?

Speaking from India over the weekend, EU trade commissioner Catherine Ashton remarked that the WTO had yet to rule on the EU's counter-claim that Boeing had received illegal subsidies from the US administration.

The EU filed its counter-complaint only hours after the US in October 2004.

The bloc contends that Boeing received $24 billion (€16.7bn) in illegal subsides in the form of research contracts and tax breaks, with the ruling expected out in a matter of months.

However Ms Ashton appeared to open the door to a negotiated resolution to the ongoing dispute, saying it was vital that both the EU and US maintained competitive aircraft industries.

"We need to have viable industries," she said, reports the Financial Times.

"So the question is: 'How do we get there?' Depending on what the [WTO] report says, if you can find a way to get to a position where you have that by constructive negotiation that can often, but not always, be a better solution than going through the legal process."

Some officials suggest a negotiated deal between the two sides could be based on the two WTO rulings once final decisions have been reached.

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