- GENEVA: The World Trade Organization ruled Wednesday that European governments gave planemaker Airbus illegal subsidies in its battle with US competitor Boeing Co., in a first key ruling on a long-running dispute between the European Union and Washington.
Made public three months after it was delivered to US and EU trade officials, the WTO's decision runs 1,061 pages over the question of whether the European Union unfairly abetted Airbus' rise to world No. 1 planemaker.
The WTO panel concluded that Airbus had only been able to launch a series of passenger jets thanks to subsidies from the EU and member states Britain, France, Germany and Spain, without which it would be a very different and much weaker company.
The ruling marks a big setback for Airbus, but is not the end of its battle — the world's largest and costliest trade dispute — with Boeing over subsidies in the market for large civil aircraft worth $3 trillion over the next 20 years.
"These subsidies have greatly harmed the United States, including causing Boeing to lose sales and market share. Today's ruling helps level the competitive playing field with Airbus," US Trade Representative Ron Kirk said in a statement.
"President Obama and I are committed to enforcing our trade agreements and, when necessary, using the dispute settlement process that is consistent with the rules-based global trading system at the World Trade Organization."
"This important victory will benefit American aerospace workers, who have had to endure watching Airbus receive these massive subsidies for more than 40 years," US Trade Representative Ron Kirk said. "Today's ruling helps level the competitive playing field with Airbus."
But the EU and Airbus cited a number of findings they said were in their favor.
If the ruling is upheld on appeal and the EU refuses to stop the offending practices, the United States could ask the WTO for permission to slap sanctions on EU goods.
The WTO panel found that British, German and Spanish aid to Airbus for its flagship 525-seat A380, the world's largest airliner, amounted to illegal export subsidies and must be corrected within 90 days. Boeing estimated the loans at $4 billion but Airbus declined to provide an estimate.
The WTO found that British, Spanish and German loans for the A380 contained illegal export aid but cleared a French loan.
Kirk said the verdict confirms wrongdoing, but it was unclear how hard it came down against Europe as it awaits the result of a countersuit alleging illegal US support for The Boeing Co.
But the EU is happy that American claims of "material injury" were rejected.
There were differing views on whether that means European subsidies were responsible for lost American jobs or market share.
The WTO "has found that EU support did not damage Boeing's pricing or profitability, and did not lead to a loss of jobs at the company," the 27-nation bloc said in a statement.
Washington and Brussels have 60 days to lodge appeals, and an Airbus spokeswoman said she expected both sides to challenge elements of the ruling.
"This whole case will go on for years," Maggie Bergsma said.
Together, the two rulings could set important guidelines for an industry worth $3 trillion over the next two decades, and one that may soon include new competitors from China and elsewhere.
Demonstrating that the subsidies actually harmed Boeing was a key requirement for the US, which brought the case to the WTO in 2004 after pulling out of a 12-year-old agreement with the EU that regulated subsidies in the civil aviation industry.
In that time, Airbus used hundreds of millions of euros in low-interest government loans — commonly called "launch aid" — to develop the A380 superjumbo. Boeing wants the WTO ruling to pre-empt similar European plans for funding Airbus' midsize, long-haul A350 XWB that aims to compete with the American company's 787 Dreamliner.
Boeing claimed the Airbus ruling proved that "each and every instance of launch aid that the US challenged was held to be illegal."
"The panel said that without the illegal subsidies it received, Airbus would not have the aerospace market share it now enjoys," said Boeing executive vice president J. Michael Luttig.
Airbus beat rival Boeing in aircraft production in 2009, delivering a record 498 aircraft and maintaining its place as the world's largest planemaker, with Boeing delivering 481. Airbus also posted 271 orders, beating Boeing's 142.
The WTO is expected to make a first, confidential ruling on US payments to Boeing sometime next month.
Airbus has sought US-EU talks to end the dispute, but Boeing wants its rival to remove any illegal subsidies first.



