Friday

28th Apr 2017

Airbus calls for end of legal battles with Boeing

  • A Boeing 777. (Photo: Sebastien Lebrigand)

Airbus has called for a global agreement on subsidies for the aircraft industry, after the World Trade Organisation (WTO) ruled that Boeing benefited from illegal US tax breaks.

In the case brought by the EU against the US, a WTO panel ruled that Boeing had benefited from illegal tax breaks facilitating the development of its new B777X jets.

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The panel also found that the US had discriminated against foreign suppliers because Boeing had agreed to use domestically produced wings in exchange for the scheme.

The case is part of a series of disputes - in September the WTO had said the EU had "failed to comply" with an earlier ruling to remove subsidies for Airbus.

The European plane-maker said on Monday (28 November) the latest ruling was a "knockout blow" to Boeing's "record-breaking subsidies".

The European Commission, which represented Airbus before the WTO, also celebrated the report. "We won the WTO dispute on Boeing," the EU executive tweeted, adding in a press release that Boeing had been set to gain €5.4 billion from the measure.

However, Boeing's lawyer J Michael Luttig noted the WTO had rejected almost all of the objections raised by Airbus and the EU, and also hailed the the ruling as a "complete victory".

The US company also pointed out that it had yet to benefit from the scheme, which was not due to roll out until 2020.

On Monday, both parties said they expected the other "losing" side to appeal the latest ruling, which is likely to drag on for more years.

Legal battles

The rows mask deeper unease about the future of the industry.

“This WTO battle is a battle of the past which benefits only the armies of lawyers both sides employ for more than a decade,” said Airbus chief executive Tom Enders in a written statement.

"I continue to think that the only way out of the ridiculous series of disputes … is to agree on a set of globally applicable rules for the support of the civil aircraft industry, which would benefit both sides of the Atlantic."

Enders, whose company is set to announce on Tuesday several hundred staff lay-offs in France and Germany, was highlighting the need for Airbus and Boeing to adapt to a new environment.

The two plane makers, which currently dominate the global aerospace industry, have for years been embroiled in legal conflicts over subsidies. Each party has won and lost battles, as both are dependent on aid.

At the end of the process, the ruling may not have any real effect because the WTO has no enforcement powers of its owns.

The EU could introduce sanctions on the US, but WTO members rarely do that because such steps risk triggering retaliatory tariffs on other products.


The prospects of such a trade war have been further heightened by the election of Donald Trump in US, who has expressed doubts about the international trade order.

Meanwhile, governments of Canada, Russia and Asia have also started to subsidise their own plane makers, threatening the domination of Airbus and Boeing.

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Investigation

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