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U.S. Gets WTO Win on EU Aircraft Subsidies

Monday, September 26, 2016
Sandler, Travis & Rosenberg Trade Report

A World Trade Organization panel has determined that the European Union did not remove aircraft subsidies previously found to be in violation of WTO rules and further violated those rules by granting additional subsidized financing. U.S. Trade Representative Mike Froman said the subsidies have resulted in lost U.S. exports worth tens of billions of dollars and called on the EU to end the subsidies “immediately.” However, EU officials said parts of the decision were “unsatisfactory,” suggesting an appeal may be forthcoming.

According to a USTR press release, in June 2011 the WTO found that the EU and four of its member states (France, Germany, Spain, and the United Kingdom) had conferred more than $18 billion in subsidized financing to Airbus and that European “launch aid” subsidies had been instrumental in permitting Airbus to launch every model of its large civil aircraft. The EU claimed to have removed the WTO inconsistencies in December 2011, but according to USTR the WTO has ruled that the EU did not come into compliance with respect to the subsidies previously found and further breached WTO rules by granting more than $4 billion in new subsidized financing for a new Airbus model. The EU noted that the WTO rejected new U.S. claims that repayable support for two Airbus models constitutes prohibited subsidies, which it called “an important win.”

The U.S.-EU dispute over government subsidies to competitors Airbus and Boeing has been underway for more than a decade and could last several years more. It is generally expected that in the next few months the WTO will issue a similar compliance ruling against the U.S. While the two sides have each sought WTO authorization to impose billions of dollars’ worth of retaliatory sanctions over the other’s noncompliance, most observers believe the dueling cases are more likely to eventually be resolved with a settlement instead.

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