The five year battle between Boeing and Airbus on claims the European-airframer received illegal subsidies for the development of its commercial portfolio has taken a significant turn with reports indicating that the World Trade Organization has ruled, at least in part, in favor of Boeing.
The preliminary ruling, which was handed down today, has been distributed confidentially to US and European trade officials.
Almost immediately, the rhetorical war of words erupted as initial reports in the Wall Street Journal citing multiple sources claiming that the initial ruling declared the repayable launch aid for development of the A380 represented an illegal subsidy by the governments of France, Germany, United Kingdom and Spain.
The United State Trade Representative says the 1000-plus page report is under review and its confidential contents are not being discussed.
Neither Boeing nor Airbus have issued official statements on the ruling or on any of the reports detailing the decision, with unnamed sources as the best place for information.
As a counter-point the report of the A380’s illegal subsidy, another report by Dow Jones Newswires and Financial Times suggests that 70% of the United States’ claims on Airbus subsidies have been dismissed, citing a European source in Brussels.
Adding that despite the finding of illegality, the ruling “also confirmed that repayable launch aid is a permissible way to partner with governments.”
Despite the lack of official confirmation of any of the details contained in the report, elected officials have not been deterred from weighing-in on the potential implications.
Congressman Norm Dicks (D-WA), whose home state hosts the majority Boeing’s commercial operations, has been a vociferous proponent for the company on Capital Hill, hailing the report and calling it “encouraging” while decrying the “the damage that has been done to America’s premier airline manufacturer which has suffered the loss of 20 percent of the market share -representing hundreds of billions of dollars in value and tens of thousands of jobs.”
Dicks urged the Pentagon, which is currently preparing for a re-bid of the US Air Force tanker contract, to take into account the WTO ruling in its decision-making.
“The U.S. government cannot reward illegal market actions that have harmed U.S. manufacturers and stolen U.S. aerospace jobs,” said Dicks. “The tanker contract must be awarded on the basis of a level playing field, and because of today’s ruling that means it must account for the direct and unlawful subsidies that have allowed Airbus to launch the A330 and other large civil aircraft without the risks that other manufacturers must assume.”
The reaction appears to solidify the assessment of aerospace analysts that the ruling, no matter the outcome, would only serve to further the rhetorical arguments and political maneuverings, rather than force real changes in how Boeing or Airbus deal with government money.
According to one source familiar with the WTO rules, any appeals filed by both sides to the preliminary ruling must be resolved within 90 days of being filed, meaning that a “final WTO ruling will be out by next spring.”
Still pending, however, is a counter suit by Airbus alleging that research and development funding through NASA has directly benefited Boeing’s ability to transfer the intellectual property towards developing commercial aircraft, such as the majority-composite 787 Dreamliner.
Yet the same source familiar with the WTO case also suggests that no matter the outcome of the European case against Boeing, “Europe will have to come into compliance with today’s ruling.” Adding that “If the EU prevails on any of the allegations it has made, that will not excuse the EU from complying with rulings that go against it in the US case.”
This post was originally published to the internet between 2007 and 2012. Links, images, and embedded media from that era may no longer function as intended.
This post originally appeared at Flightglobal.com from 2007 to 2012.