Airbus says it will obey WTO ruling on aircraft subsidies

A European Commission document said Airbus would repay an A350 loan to the UK government this year and reduce the drawdown of other loans. (Reuters)
Updated 22 May 2018
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Airbus says it will obey WTO ruling on aircraft subsidies

PARIS: Airbus plans to set out measures that will bring it into line with a World Trade Organization ruling on subsidies for its A350 and A380 jets, a senior lawyer said on Tuesday.
The move comes after the US won the right to seek sanctions against EU goods following a partial victory in its 14-year legal battle against European government support for Airbus at the World Trade Organization.
The EU says it expects to strike a similar legal blow in a parallel case on US support for Boeing later this year.
“We will be announcing this morning a complete package of measures to fully comply with last week’s ruling, putting us basically at a point where we have nothing left to answer and no sanctions possible,” Karl Hennessee, senior vice president and head of litigation at Airbus, told BBC radio’s Today program.
The subsidies row coincides with transatlantic tensions over US aluminum and steel tariffs, and the impact on European firms from Washington’s decision to exit an Iran nuclear pact.
It is also part of a two-way battle between the EU and the US over aircraft subsidies that could spark tit-for-tat reprisals between the two trade superpowers.
In a rare public face-off between senior strategists in the dispute, Boeing’s chief external lawyer in the case told the same BBC program that the US would be free to target any European products, not just aerospace.
“The WTO will decide what the proper number is and ... give the US that authority,” Robert Novick, co-managing partner at US law firm WilmerHale, told the BBC Today program.
“In parallel, the US will develop a list of products on which it might consider imposing countermeasures,” he added.
The transatlantic dispute stems from mutual claims that the world’s two largest planemakers benefited from illegal subsidies in the form of subsidized government loans to Airbus and research grants or tax breaks to Boeing.
Underscoring the cost and complexity of the case, the two sides have been arguing since 2011 about whether they complied with earlier rulings.
Airbus did not say how it would comply with the final ruling on European aid but a European Commission document said it would repay an A350 loan to the UK government this year and reduce the drawdown of other loans.
It also said the bankruptcy of Russian carrier Transaero, resulting in fewer A380 deliveries, had helped it to comply, while other aid been blunted by the passage of time — an argument that has previously been rejected by the US.
Hennessee also called for a settlement similar to one between Canada and Brazil that set the tone for global plane financing.


Moody’s raises GDP growth forecasts for Saudi Arabian economy

Updated 18 October 2018
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Moody’s raises GDP growth forecasts for Saudi Arabian economy

  • The Moody’s report released on Wednesday maintained the Kingdom’s A1 rating
  • he agency expects higher oil production to boost the Saudi economy

LONDON: Moody’s has raised Saudi Arabia’s GDP growth forecast for 2018 to 2.5 percent from 1.3 percent as it maintains a “stable outlook” for the Saudi economy.
The ratings agency also increased its 2019 GDP forecast to 2.7 percent, well above the 1.5 percent previously predicted, the Kingdom’s Ministry of Finance said.
Moody’s numbers exceed the forecasts of the Saudi Arabian government for the 2019 budget announced in September.
The Moody’s report released on Wednesday maintained the Kingdom’s A1 rating.
The agency expects higher oil production to boost the economy, but also said developments in the non-oil sector will contribute to stronger GDP growth in the medium and long-term.
Moody’s said the Saudi government deficit for the 2018 and 2019 will hover between 3.5 percent and 3.6 percent, a far cry from its previous expectations of 5.8 percent and 5.2 percent.
Moody’s commended Saudi Arabia’s reasonable control of expenditure, even in the face of higher oil revenues.
“In addition to the moderate funding requirements, the government is able to access ample sources of liquidity, from both domestic or international capital markets and financial reserves. It is unlikely to face problems in financing the fiscal deficit,” the report said.
Last week, the IMF lifted its projections for economic growth in Saudi Arabia saying the Kingdom’s economy is expected to grow by 2.2 percent in 2018 and 2.4 percent next year, raising previous projections by 0.5 percent.