WTO upholds some US claims in Airbus case

The World Trade Organization Appellate Body announced Wednesday it has upheld parts of a U.S. victory in its case against illegal European subsidies to plane-maker Airbus.

The Airbus case and a parallel EU case against Boeing subsidies are the largest cases ever adjudicated by the WTO and are a source of trans-Atlantic trade tension.

“I am very pleased to announce that in a landmark decision, the World Trade Organization (WTO) Appellate Body has found that Airbus received $18 billion in subsidies that harmed the United States and our aerospace industry — namely, Boeing, its workers and suppliers,” Office of the U.S. Trade Representative Timothy Reif said in a statement. 

“This report confirms that for decades the European Union member states France, Germany, Spain, and the United Kingdom, have provided massive amounts of market-distorting launch aid and other subsidies that were inconsistent with WTO rules.”

The EU in a statement noted that a key finding in the case — that subsidies for the jumbo A380 were not "prohibited" subsidies — has been rejected by the Appellate Body. These more severe subsidies would have had to have been withdrawn immediately, possibly meaning Airbus would have to repay the launch aid amounts to EU governments. The other subsidies are only "actionable" and could mean that Airbus cannot receive such subsidies in the future. These matters will be the subject of future implementation panels at the WTO.

Another WTO dispute settlement panel has also found that Boeing benefited from illegal subsidies in the form of faulty space and defense contracts. That decision awaits appeal. If a negotiated settlement is not reached, both sides could resort to trade retaliation, especially if European countries provide similar subsidies to the new Airbus A350.