EU said to still be subsidising Airbus
The World Trade Organisation (WTO) has found that the EU has failed to withdraw all subsidies to planemaker Airbus amid US tariffs on European goods, three people familiar with the matter have said.
A new compliance report, which has yet to be published, found that the Airbus A350 jetliner continues to be subsidised as a result of earlier government loans, they said.
The WTO could scale back the amount of harm deemed to have been caused to US rival Boeing, which influenced a decision to allow $7.5bn of US tariffs against the EU earlier in 2019, two sources said.
Neither the WTO nor the parties in the 15-year trade case, which involves mutual claims of billions of dollars of subsidies to both planemakers, had any immediate comment.
The US imposed tariffs on European goods, including most Airbus planes, in October. The $7.5bn tariff ceiling approved by the WTO was based on the amount of economic damage believed to have been caused to Boeing as a result of European support to Airbus, mainly in the form of government loans for the A380 and A350.
The WTO overruled EU attempts to halt the tariffs while Brussels brought forward new arguments to show that it had complied with earlier rulings, in a somewhat rare second compliance procedure.
When published the report will deliver the WTO’s verdict on those new arguments, which rely partly on the fact the A380 is facing the axe because of poor sales, meaning any damage to Boeing is temporary.
Two of the people familiar with the case said the WTO had accepted part of these arguments, implicitly agreeing to reduce the ceiling for US retaliation by as much as $2bn. It remains unclear how quickly a partial European victory on that front could translate into lower tariffs, due to legal technicalities.
By appealing against the new compliance finding, the US could effectively send the case into a void as the WTO Appellate Body, which hears appeals, is about to cease functioning due to US blocking of new appointments.
Instead, the EU is expected to focus on the prospect of counter-tariffs in a parallel case over Boeing subsidies likely to come to a head early in 2020, while calling for a broader negotiated settlement on aircraft support worldwide.