WTO rules against Airbus in subsidies row with Boeing

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In its ruling on Tuesday, the World Trade Organization (WTO) said the European Union had failed to remove support in the form of preferential government loans for Airbus's A380 superjumbo and A350 twin-aisle jet programs, causing losses for Boeing and United States aerospace workers.

In 2004, the United States lodged its original complaint with the WTO, claiming support of Airbus by France, Germany, Spain and the United Kingdom for the development of civilian airliners was unfair because it hurt USA -based Boeing's sales and market share.

"Unless the European Union finally takes action to stop breaking the rules and harming US interests, the United States will have to move forward with countermeasures on European Union products", Lighthizer said.

The appellate body maintained a ruling by the WTO's compliance panel that European Union "launch aid" provided to Airbus resulted in lost sales for Boeing in the twin-aisle and very-large aircraft markets.

The shares of Airbus had fallen shortly after the WTO issued its findings and were poised to close down around 0.86 percent.

"Today the WTO Appellate Body, the highest WTO court, has definitively rejected the United States challenge on the bulk of EU support to Airbus, and agreed that the EU has largely complied with its original findings", declared EU Commissioner for Trade Cecilia Malmström: "Significantly, it dismissed the vast majority of the United States claims that this support had damaged Boeing's aircraft sales".

In a direct challenge to France, Germany, the UK and Spain, Boeing said the United States Trade Representative (USTR) can now seek remedies in the form of tariffs against European imports to the US.

The move means that the United States, under WTO rules, can ask an arbitrator to determine the level of retaliation it can seek against the European bloc as a result of its failure to comply.

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It has been predicted that the tarrifa of Boeing could reach billions of dollars a year starting as early as 2019.

Therefore, Airbus chief executive Tom Enders already said that the WTO ruling of Tuesday "is really only half the story".

Both sides are expected to push for billions of dollars in sanctions annually by barring a negotiation deal.

"The authorized tariffs are likely to total billions in duties per year, unless and until Airbus addresses the illegal subsidies it received from European governments for its most recently launched airplanes", the manufacturer continued.

European officials seized on Boeing's recent criticism of the A380's poor sales record as a way to limit any estimates of damage to Boeing caused by subsidies for the double-decker jet.

"Boeing is now at more than 90% failed claims". As airlines expand into the Middle East and China, both companies will be vying for new business, he said. According to Airbus, 94% of all original US claims have now been dismissed by WTO. For a claim to stick at the WTO, subsidies must be found not just to exist but to have caused real harm.

"Companies should not have to compete with governments - that is what this case is about", said Robert Novick, co-managing partner at Boeing's trade lawyers WilmerHale.

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