Boe­ing down­plays il­le­gal sub­si­dies

EU cries foul over bil­lions granted by U.S. gov­ern­ment

The Washington Times Daily - - Business - BY TIM DE­VANEY

In the lat­est Boe­ing-air­bus show­down, the world’s two big­gest plane man­u­fac­tur­ers each claimed vin­di­ca­tion from a World Trade Or­ga­ni­za­tion rul­ing Mon­day that the U.S. had pro­vided bil­lions in il­le­gal sub­si­dies to Boe­ing.

The U.S. gov­ern­ment and the Chicago-based com­pany noted, how­ever, that the WTO did not buy the most ex­trav­a­gant Euro­pean claims about the U.S. sub­si­dies and al­ready had come down much heav­ier on the Euro­pean Union for its sup­port of Air­bus.

“It is now clear that Euro­pean sub­si­dies to Air­bus are far larger — by mul­ti­ples — and far more dis­tortive than any­thing that the United States does for Boe­ing,” U.S. Trade Rep­re­sen­ta­tive Ron Kirk said in a state­ment re­act­ing to the rul­ing by the WTO’S Ap­pel­late Body. “The United States is ready to ad­dress all of the WTO find­ings, and we ex­pect Europe to do the same.”

Euro­pean lead­ers and Air­bus are cheer­ing the WTO’S decision that Boe­ing had re­ceived “at least $5.3 bil­lion” in il­le­gal sub­si­dies from the U.S. from 1989 to 2006.

While the U.S. says the num­ber is closer to $3 bil­lion to $4 bil­lion, the Euro­peans’ ini­tial case had claimed $19 bil­lion in il­le­gal U.S. sub­si­dies, though they re­cently had scaled back that claim.

The fed­eral fund­ing in­cludes $2.6 bil­lion from NASA, $1.2 bil­lion from the Depart­ment of De­fense and $2.2 bil­lion from the For­eign Sales Corp., ac­cord­ing to the EU. Kansas also pro­vided about $500 mil­lion in il­le­gal sub­si­dies, while Washington state gave or promised $3.1 bil­lion in il­le­gal fund­ing from 2006 through 2024, the Euro­peans claimed.

Air­bus claims these sub­si­dies re­sulted in the com­pany los­ing about $45 bil­lion in sales to Boe­ing.

“To­day’s rul­ing vin­di­cates the EU’S long-held claims that Boe­ing has re­ceived mas­sive U.S. gov­ern­ment hand-outs in the past and con­tin­ues to do so to­day,” EU Trade Com­mis­sioner Karel De Gucht said in a state­ment.

“The costs to EU in­dus­try from these long-term sub­si­dies run into bil­lions of euro. This land­mark rul­ing clearly shows the U.S. has used an un­law­ful way of sup­port­ing busi­ness that has stood in the way of fair com­pe­ti­tion. The U.S. should now put an end to such harm­ful sub­si­dies.”

But the U.S. gov­ern­ment and the Chicago-based man­u­fac­turer were sat­is­fied with the re­sults.

“The Ap­pel­late Body to­day slashed ear­lier find­ings of harm to Air­bus from U.S. sub­si­dies,” Boe­ing said in a state­ment. “The decision con­firms that in terms of amount, ef­fect and na­ture, U.S. gov­ern­ment sup­port to Boe­ing is min­i­mal in com­par­i­son to the mas­sive Euro­pean sub­si­dies pro­vided to Air­bus.”

The U.S. points out that Europe’s sup­port for Air­bus was at least three times higher than Boe­ing’s re­spec­tive sup­port. In May 2011, the WTO panel is­sued a sim­i­lar decision against the EU for $18 bil­lion given to Air­bus in low-in­ter­est loans known as “launch aid.”

Ac­cord­ing to the U.S. trade rep­re­sen­ta­tive, this Euro­pean pro­gram has cost Boe­ing far more busi­ness than Amer­i­can sub­si­dies did Air­bus — 342 lost sales of large civil air­craft. That com­pares with slightly more than 100 sales Air­bus has lost be­cause of Boe­ing’s sub­si­dies.

Both sides ac­cused the other of re­ly­ing heav­ily on the sub­si­dies.

Air­bus said Boe­ing would not have been able to launch its pop­u­lar 787 Dream­liner with­out the help of the U.S. gov­ern­ment, lead­ing the Euro­pean com­pany to nick­name the ri­val plane the “Sub­sidy-liner” and the “7-aid-7.”

Boe­ing called the launch aid pro­gram a “mar­ket­dis­tort­ing sub­sidy with­out which Air­bus it­self would most likely not have ex­isted and no Air­bus air­craft would have been built at all.”

While Boe­ing says it is ready to com­ply with the rul­ing, it added that Europe has yet to com­ply with the WTO’S sim­i­lar find­ing against its sup­port of Air­bus.

“Air­bus has not shown the same com­mit­ment to com­pli­ance with the WTO’S de­ci­sions and rules,” Boe­ing said. “The EU had un­til Dec. 1, 2011, to com­ply with the rul­ing against the il­le­gal Air­bus sub­si­dies, and it re­fused to com­ply.

“What’s more, Euro­pean gov­ern­ments have re­cently pro­vided bil­lions of dol­lars in new launch aid for the next Air­bus model, the A350, con­tin­u­ing this il­le­gal prac­tice in de­fi­ance of the WTO.”

Air­bus has ap­plauded a rul­ing by the World Trade Or­ga­ni­za­tion that Boe­ing re­ceived “at least $5.3 bil­lion” in il­le­gal sub­si­dies from the U.S. from 1989 to 2006. The U.S. has noted the WTO came down heav­ier on the Euro­pean Union for its sup­port of Air­bus.

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