Belfast Telegraph

Wednesday 20 August 2014

EU to appeal over Airbus ruling

The European Union is set to appeal against a ruling that found it gave plane maker Airbus illegal subsidies

The European Union is set to appeal against a landmark trade ruling that found it gave plane maker Airbus a wide range of illegal subsidies in its battle with US competitor Boeing.

The subsidies were said to have unfairly tilted a market worth more than £2 trillion over the next two decades.

The appeal covers nearly the entire case against European support for Airbus, from the billions in low-interest government loans used to construct the A380 superjumbo to infrastructure provisions and research and development funding.

Despite the appeal, EU officials insisted that last month's 1,061-page decision by the World Trade Organisation was "mixed".

Legal experts, however, say Washington resoundingly won the first round as Brussels awaits a confidential verdict in September in a countersuit alleging illegal US aid for Boeing.

The six-year-old dispute is moving with record slowness and the EU appeal will again delay US hopes of speedy compliance with WTO rules on loans and other payments to the France-based manufacturer - allowing European governments to first see the results of their complaint that Boeing receives millions in back-door subsidies through Nasa and US Defence Department contracts.

The two rulings could set industry-defining guidelines and ones that become even more important as new competitors from China and elsewhere emerge.

But Airbus' immediate concerns are that it can roll out well-tried funding strategies for the development of its mid-size, long-haul A350 XWB - to compete against Boeing's 787 - and that a conclusive judgment on illegal aid does not add a political hurdle to the company's battle over a £23 billion US Air Force contract for refuelling jets.

The WTO's ruling shows that Brussels recognised that Airbus has benefited from subsidies, but argued that the amount was negligible. The panel rejected this claim and said the EU's calculations "vastly underestimate" the subsidies.

The WTO's own conclusion for the value of Airbus' unfair advantage was censored on the grounds that it would reveal confidential business information.

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