Airbus Takes Steps To Comply with WTO Ruling

 - May 22, 2018, 11:39 AM

Airbus said Tuesday that it has reached agreement with France, Germany, Spain, and the UK on “some” changes to the terms of the reimbursable launch investment (RLI) loans for the A380 and A350XWB programs, claiming it now fully complies with last week’s World Trade Organization ruling in the 14-year-long dispute.

The WTO on May 15 concluded 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. Although the Geneva-based body’s appeals panel agreed with earlier findings that the European RLI loans for civil aerospace development projects do not constitute a prohibited subsidy, it also ruled that the EU would need to make some adjustments to achieve full compliance.

“Those have now been addressed by the EU,” Airbus said in a statement while declining to provide details on the changes to the A380 and A350 repayable loan agreements. “The terms of these amendments—like the terms of the original RLI contracts themselves—remain confidential but they are aligned with current market conditions,” it noted.

The EU presented the measures to the WTO already last Friday, an Airbus spokeswoman told AIN. It is now up to the WTO to review them, she said, stressing the airframer’s confidence it has “now achieved full compliance” in the case and calling any potential sanctions by the U.S. unwarranted.

Airbus general counsel John Harrison described the loans’ modifications as “a clear demonstration of the will to ensure a fair trade environment respecting international trade agreements.” He said Airbus looks forward to seeing “the same constructive attitude and actions of the U.S. and Boeing in the upcoming DS353 case.”

The EU launched DS353, or the so-called “Boeing case,” in 2004 to challenge alleged subsidies to Boeing. It came in reaction to the DS316, or the “Airbus case,” in which the U.S. accused the EU of handing massive subsidies to Airbus.

The EU initiated a third EU/U.S. trade dispute concerning alleged subsidies to their respective large civil aircraft manufacturers in December 2014, in which it challenged the support provided to Boeing in exchange for locating the 777X wing production and final assembly in Washington state. The WTO Appellate Body issued its report in September last year.