Aircraft-subsidy dispute in its final approach
World Trade Organization rules next week on whether Boeing got unfair advantage
PARIS – The United States will find out next week whether it has succeeded in overturning a ruling that Boeing benefited from billions of dollars of subsidies – the latest twist in a transatlantic row that shows no signs of abating after years of inconclusive wrangling.
Appeal judges at the World Trade Organization are expected to uphold some claims of unfair support for Boeing, while Washington edges toward possible sanctions against the European Union in a parallel case that spotlighted harmful aid to Airbus. The two trading superpowers have been fighting for more than seven years over mutual allegations of illegal handouts for passenger plane production, affecting hundreds of thousands of jobs at Boeing, its European rival Airbus and their suppliers.
Next week’s verdict marks the latest stage in the dispute as Airbus and Boeing battle for aircraft sales estimated at $4 trillion over the next 20 years.
The twin subsidy cases at the WTO have already entered the record books as the world’s largest and costliest trade dispute, with both sides claiming victory at every step. In the latest stage, the WTO’S appellate body will give its verdict on aid to Boeing on Feb. 29, while ordering both parties to keep the contents confidential while each side checks that sensitive business data does not accidentally get made public.
The ruling is then likely to be published some time in March, giving the United States six months to fix any unfair measures, people familiar with the case said on Friday.
The WTO declined to comment.
The Geneva body ruled last March that Boeing had received at least $5.3 billion of illegal U.S. subsidies, sparking an appeal f rom Washington and a technical appeal from the EU.
The aid included $2.6 billion of research funding from space agency NASA.
Both sides are expected to keep the focus on their respective cases, with both Washington and Brussels scoring victories on some but not all of their complaints.
Experts say plaintiffs usually win at least part of their cases at the WTO.
In the original U.S. case, which is running several months ahead of an EU counter-suit, WTO experts found that Airbus had received billions of dollars of illegal subsidies from European governments, mainly in the shape of preferential loans.
The two sides do not agree over the amounts involved but Washington has said European support to Airbus dwarfed its aid for Boeing, while Brussels argues the grants supplied to the U.S. company are more toxic than loans supplied to Airbus.
The U.S. has rejected EU claims that nations where Airbus is based – France, Germany, Spain and U.K. – complied with the WTO verdict and wants to impose $7 billion to 10 billion in annual sanctions.
A flashpoint in the ongoing dispute is likely to be the extent to which Airbus uses
The twin subsidy cases have already entered the record books as the world’s largest.
similar funding system for its next plane project, the A350.
One of the biggest bones of contention left in the mammoth case is whether that plane is covered by the 2,000 pages of rulings already published and therefore whether its funding can help to build the case for U.S. sanctions.
A person familiar with the matter said Washington could trigger a procedure within weeks designed to speed up sanctions.
Most analysts say it could be years before sanctions actually kick in but that if they do, they could engulf other industries.
Instead, many trade experts expect the two sides to attempt to negotiate a settlement as the legal appeals and counter-appeals become more and more entangled.
Brazil, Canada, China, India, Japan and Russia have an eye on the market and both sides have an interest in clarifying the rules for how governments can facilitate aircraft development.
So far, neither side has flinched in the protracted dispute which, according to people involved, has conservatively cost $100 million in travel and fees for lawyers and consultants.