Published: Wed, May 16, 2018
Finance | By Claude Patterson

WTO rules European Union failed to stop subsidies on some Airbus aircraft

WTO rules European Union failed to stop subsidies on some Airbus aircraft

The two archrivals have been locked in a back-and-forth trade dispute over subsidies since 2006.

But the Geneva watchdog dismissed USA claims that loans for Airbus's most popular models, the A320 and A330, were also costing Boeing significant sales and in so doing narrowed the scope of one of the world's longest and costliest trade spats. It is under appeal and should be decided within the next year. The Geneva-based WTO can't force nations or companies to drop payments that violate trade rules, but it can authorize retaliatory measures to pressure governments into complying with its rulings. Those compliance issues represent the only instances where Boeing was negatively affected, according to the European Commission, which praised the appellate body's ruling.

The WTO's appeals body said the European Union had failed to remove subsidised government development loans for the world's largest airliner, the A380, and Europe's newest long-haul jet, the A350, causing losses for Boeing and US aerospace workers. The bloc compounded the issue with below-market loans for the planemaker's marquee A350 jetliner.

A big trade ruling in the long battle between Airbus and Boeing left both sides cheering.

"The other half coming out later this year will rule strongly on Boeing's subsidies and we'll see then where the balance lies", he said.

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.

"Today's final ruling sends a clear message: disregard for the rules and illegal subsidies is not tolerated", said CEO Dennis Muilenburg.

BA shares closed -0.7% in today's trade, while EADSY ended -1.9%. Boeing fell less than 1 percent to $342.09 at 12:37 p.m.in NY, recovering from losses logged before the decision was issued.

Boeing's top executive appeared to praise the ruling, and said it was time for "all parties" to work for "the mutual health of our industry".

The WTO said the European Union had failed to remove support in the form of preferential government loans for the world's largest airliner, the A380, and Europe's newest long-haul plane, the A350, causing losses for Boeing and US aerospace workers.

The WTO decision on the latest in a string of tussles between Europe's Airbus and USA rival Boeing comes as the Trump administration has exerted intense pressure on the Geneva-based organisation over what the president alleges is its "unfair" treatment of the United States.

-With assistance from Andrew Mayeda.

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