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

Airbus A380

Airbus A380

The European Union is continuing to provide illegal subsidies to plane maker Airbus, the World Trade Organisation's (WTO) appellate body has ruled.

The disputed funding to Airbus has cost U.S. aerospace manufacturers "tens of billions of dollars in lost sales", U.S. Trade Representative Robert Lighthizer said in a statement.

The tariffs could be scheduled as early as 2019 and would likely be the largest-ever WTO authorization of retaliatory tariffs, Boeing said.

The next stage of the 14-year battle will be over the size of the tariffs the USA will be allowed to impose to compensate for lost exports.

The U.S. says it would slap tariffs on European goods unless the EU stopped "harming U.S. interests", but the European Commission says the U.S. had lost most of its claims and that much of the aid faulted by the WTO had expired in 2011.

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The WTP decision affirmed a ruling that France, Germany, Spain and the United Kingdom have failed to adequately remedy market-distorting aid for the launch of Airbus's A380 superjumbo, infrastructure support and equity investments that unfairly benefited the plane-maker.

"Today's final ruling sends a clear message: Disregard for the rules and illegal subsidies is not tolerated", said Boeing Chairman and CEO Dennis Muilenburg. "The commercial success of products and services should be driven by their merits and not by market-distorting actions".

The remaining claim in front of the WTO alleges illegal tax breaks for the 787 and 777. It is under appeal and should be decided within the next year.

At the same time, the WTO is close to finalizing a similarly drawn-out case against subsidies for Boeing, and Airbus says this could in turn spark European Union sanctions against the United States.

Airbus chief executive Tom Enders said the report was "really only half the story..."

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Boeing shares were down 0.7% at 342.22 on the stock market today.

Airbus General Counsel John Harrison said: "Airbus recognizes the importance of the WTO and the Appellate Body's findings and will do what is necessary to correct any errors and this report confirms the efforts we are making".

However, the amounts will depend on arbitration, expected to take around a year.

The European Commission argued that the WTO decision rejected most USA claims and was its victory. "It shatters Boeing's claim it perpetuated for years that their WTO case undermines European industrial-government partnership".

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