Following on from the previous post on potential EU-US litigation over American procurement of air refuelling tankers, we now move to their older aerospace struggle over commercial jets. The FT has an extensive history of this longstanding trade conflict. Basically, Boeing charges the European Union with providing generous subsidies to the European aerospace consortium. In turn, Airbus charges Boeing with receiving equally fat subsidies from the likes of NASA and Washington state. To make a long story short, both parties filed cases against each other in 2004, with the EU filing one in immediate retribution. For true trade aficionados, view details of the case filed by the US on behalf of Boeing against Airbus (DS 316) on the WTO website. If you're really into it, go knock yourself out and also view the countersuit by the EU on behalf of Airbus against Boeing (DS 317).However, the case filed by Boeing against Airbus has come down the pike sooner. A preliminary ruling disclosed only to the interested parties was made in September of last year. Now, the long-awaited decision--six years in the making--has once more been disclosed to the participants first. As details are just trickling out, Airbus is claiming victory, although this is hotly contested by Boeing. Especially in international economic diplomacy, it seems, spin is healthy. Moreover, the conduct of the imminent launch of the Airbus A350 model hinges on the ruling:
Airbus seized on a World Trade Organisation report issued on Tuesday to claim it had won a significant victory in a long-running US case alleging that the European aircraft maker received billions in illegal subsidies.My ultimate conclusion mirrors that of most observers. Both sides are hardly innocent of aiding their respective firms. In the end, both largely cancel each other out, leaving trade lawyers the only real "winners" in these litigation shenanigans. Nevertheless, details of this ruling will help determine allowable benefits extended by the state to aircraft manufacturers in Brazil (Embraer), Canada (Bombardier), and the rest who seek to export commercial jets.
Although Airbus conceded that the WTO’s 1,000-page ruling had found “elements of subsidy” in past government loans, it claimed the report had found its practices had not harmed Boeing, its rival, or cost US jobs. Airbus, a division of EADS, also said the report, which is supposed to be confidential, confirmed that the WTO had rejected 70 per cent of the US claims and no payments had caused “material injury to any US interest”.
In a sign of the fierce public relations war that the WTO report was always expected to trigger between the world’s two biggest commercial aircraft makers, Boeing’s legal adviser Bob Novick said the Airbus statement was “ridiculous” and its material injury claim was “a diversion”.
“It’s as though you’re charged with 10 counts of murder, you get acquitted on one but convicted on nine – is that a victory?” he said. “They characterise it as a victory – I think of it as a loss.” Mr Novick also took issue with Airbus’s claim that the organisation had “refused the US request for remedies as legally inappropriate...That has no bearing on US request for remedies,” said Mr Novick. “The Airbus statement on that is completely false.” The two sides are also expected to clash over Airbus claims that future funding of its newest aircraft, the A350, “is not affected in any way by [Tuesday’s] report” and US attempts to include it were “specifically rejected”.
John Clancy, a European Commission spokesperson, warned against jumping to conclusions or claims of victory in the dispute, now entering its sixth year. “Cases like this are never black and white and this is just one further step in the litigation,” he said, adding that a fuller picture would only emerge once the WTO released its first findings on the European Union’s countersuit against the US over subsidies allegedly paid to Boeing. This is expected in June.
European officials, while acknowledging that the WTO found some faults, maintain that their biggest victory was a conclusion that so-called launch aid did not constitute an illegal programme against Boeing. Instead, the WTO panel seemed to conclude that each of the loans under this category had to be assessed independently and many were acceptable, according to insiders. “That was the biggest victory for Airbus,” one European diplomat said.
Airbus emphasised this point. “The panel has now reconfirmed what we have always said: reimbursable loans are a legal instrument and they have not caused one single job loss to the US aerospace industry,” said Maggie Bergsma, Airbus spokeswoman. Europe has repeatedly offered to negotiate a settlement with the US in a dispute in which some trade analysts said neither side was innocent.
