WTO rules European Union failed to stop subsidies on some Airbus aircraft

  • WTO rules European Union failed to stop subsidies on some Airbus aircraft

WTO rules European Union failed to stop subsidies on some Airbus aircraft

The report comes at a time of mounting trade tensions over US aluminium and steel tariffs and the impact on European firms of Washington's decision to exit the Iran nuclear pact.

The World Trade Organization ruled on Tuesday the European Union had ignored requests to halt all subsidies to planemaker Airbus, prompting the United States to threaten sanctions against European products unless the EU stops "harming US interests".

The two archrivals have been locked in a back-and-forth trade dispute over subsidies since 2006. "The commercial success of products and services should be driven by their merits and not by market-distorting actions", said Boeing Chief Executive Officer Dennis Muilenburg. The Geneva-based WTO can't force nations or companies to drop payments that violate trade rules, but it can authorize retaliatory measures to pressure governments into complying with its rulings.

The ruling centres on actions taken by the European Union generally, as well as four of its member states: Britain, France, Germany and Spain. The bloc compounded the issue with below-market loans for the planemaker's marquee A350 jetliner.

The WTO decision on the latest in a string of tussles between Europe's Airbus and U.S. rival Boeing comes as the Trump administration has exerted intense pressure on the Geneva-based organisation over what the president alleges is its "unfair" treatment of the United States. "The EU will now take swift action to ensure it is fully in line with the WTO's final decision in this case".

Shares of Airbus reversed earlier gains to trade down as much as 1.8 per cent immediately after the ruling was published. Boeing fell less than 1 per cent to US$342.10 at 11.43 a.m.in NY.

The authorized tariffs are likely to total billions in duties per year, unless and until Airbus addresses the illegal subsidies it received from European governments for its most recently launched airplanes.

In 2004, the United States lodged its original complaint with the WTO, claiming support of Airbus by France, Germany, Spain and the United Kingdom for the development of civilian airliners was unfair because it hurt US -based Boeing's sales and market share. "Significantly, it dismissed the vast majority of the US claims that this support had damaged Boeing's aircraft sales".