The World Trade Organization (WTO) ruled Tuesday that the European Union had failed to honor certain previous rulings related to subsidies to Airbus, thereby authorizing tariffs by the U.S. against European imports by as early as next year. The WTO continues to study tax incentives provided by Washington state to Boeing and expects to rule by the end of this year or early in 2019 on an appeal of an earlier decision that the support constituted illegal subsidies.
Although the WTO appeals panel agreed with earlier findings that the European repayable launch investment (RLI) loans for civil aerospace development projects do not constitute a prohibited subsidy, it also ruled that the EU would need to make some modifications to achieve full compliance, particularly related to the A350 and A380.
“Airbus is currently implementing changes to respond to these findings,” said the European airframer in a statement. “This means that any potential U.S. sanctions, now likely to be minor compared to what we expect on the case against Boeing’s subsidies, could result to be counterproductive and ill-timed.”
Boeing disagrees and said in its own statement that the retaliatory tariffs by the U.S. could amount to the largest ever authorized by the WTO.
“Today's final ruling sends a clear message: disregard for the rules and illegal subsidies is not tolerated,” said Boeing CEO Dennis Muilenburg. “The commercial success of products and services should be driven by their merits and not by market-distorting actions. Now that the WTO has issued its final ruling, it is incumbent upon all parties to fully comply as such actions will ultimately produce the best outcomes for our customers and the mutual health of our industry.”
For its part, Airbus called any adjustments needed to its A350 and A380 programs “minor,” and said that it will do what it needs to do to correct any “errors.”
“The result [of the appellate body’s ruling] is simple: Airbus pays back its loans, Boeing pays back nothing and continues to exploit the generosity of the U.S. taxpayer,” said Airbus CEO Tom Enders. “Despite Boeing’s rhetoric, it is clear that their position today is straightforward healthy: they have half the market and a full order book, they have clearly not been damaged by Airbus repayable loans.”