U.S. officials claimed victory Thursday in a long-standing dispute with Europe over government funding for aircraft manufacturers after a World Trade Organization panel rejected the bulk of Europe’s allegations about American support for Boeing.
In the second of two landmark decisions in the largest-ever trade case brought before it, the WTO did find that U.S. federal and state government programs funneled about $5.3 billion in improper subsidies to Boeing between 1989 and 2006.
However, most of that came from now-defunct NASA programs, and the figure is much smaller than the roughly $19 billion in subsidies alleged by European officials.
By contrast, the WTO largely ruled last summer in favor of U.S. allegations against the government loans and other support given to Airbus by the European Union and individual nations. Although the amounts are disputed, U.S. Trade Representative Ron Kirk said Thursday that Europe’s “launch aid” and other support of Airbus exceeded $20 billion — support that U.S. officials expect to be withdrawn under the WTO findings.
Appeals are expected from both sides, which could delay final resolution of the matter for several months.
But Kirk said the ruling broadly favored the U.S. position that Europe had steadily underwritten Airbus and helped the company, a consortium spanning several European nations, compete against Boeing.
“This vindicates the position we have taken the last 20 years, that subsidies the Europeans have given Airbus dwarf anything the U.S. has given Boeing,” Kirk said.
European officials gave the verdict a different spin, arguing that it found clear U.S. violations of WTO rules.
“One can always play with the figures and present them in a different way,” said Joao Vale de Almeida, European Union ambassador to the United States. The ruling “establishes a link between subsidies deemed to be illegal and production of an aircraft that is competing with others. . . . Boeing can no longer claim innocence in this market.”
It is not clear how the ruling may affect the fortunes of the two corporate giants, which dominate the world passenger jet market and are important exporters. The two have a virtual duopoly for the long-haul jets used by airlines, have strong defense businesses and are similar in size: Boeing sales were about $65 billion last year, compared with about $66 billion for European Aeronautic Defense and Space, Airbus’s parent company.
They also face increasing competition from regional jets being built in Brazil, Canada and elsewhere and are watching closely as China — considered a key market for passenger jet sales in coming years — works to nurture its aircraft industry.
Each company targeted its rival’s premier products in analyzing the WTO ruling, with each characterizing the other’s subsidies as “massive” and claiming that neither Boeing’s 787 Dreamliner nor Airbus’s A380 would be flying without government support.