Emirates Airline recently ordered 50 new A350 XWB aircraft, a $16-billion contract. The A350 twin-engine, wide-body jets continue to impact the cost and market-share for Boeing's 787 Dreamliner series, the WTO has ruled.

WTO Sides with U.S. Over Jet Subsidies, Again

Dec. 3, 2019
Appellate decision upholds the finding that the EU unlawfully subsidized the Airbus A380 and A350 wide-body aircraft programs

A World Trade Organization appellate ruling in the pending transatlantic trade war favors the U.S., and indirectly Boeing Co., over the European Union and Airbus S.A. The new decision reaffirmed WTO's October determination that the U.S. may implement $7.5 billion/year worth penalty tariffs on imports from the EU — because it found that the EU unlawfully subsidized the Airbus A380 and A350 wide-body aircraft programs.

In October the U.S. drew a list of potential tariffs to be implemented as a result of the ruling, but that list spares the parts produced by Airbus and delivered to its Mobile, Ala., assembly operations, where the Airbus A320 and A220 aircraft are built.

The EU appealed the October ruling, claiming the subsidies issue had been resolved — in part because Airbus plans to cease production of the A380 in 2021.

In its response to the appellate ruling, Airbus stated: "As a result of the panel’s findings, the U.S. should immediately reduce the $7.5 billion in tariffs that the WTO authorized to the U.S. in October by around $2 billion. This is the direct result of the panel finding that the loans for the development of the A380 no longer have an impact on Boeing sales, and that therefore the value of the lost sales no longer exists."

The OEM added: "The U.S. Trade Representative (USTR) now should accept the reality that loans made to Airbus in the early 2000s – for the development of a product that is no longer being sold – do not have an impact on Boeing sales."

While WTO acknowledged the A380 can no longer affect sales of Boeing's 747 jet, it determined that that aircraft would continue to cause damage to Boeing's wide-body jet market share as long as it is produced and delivered.

The WTO also reaffirmed that the Airbus A350 twin-engine wide-body has under-cut the sales and market-share for the Boeing 787 Dreamliner.

Both the EU and U.S. trade representatives have endorsed the idea of a negotiated settlement over the issues at stake, but each side alleges its opponent is not cooperating toward that outcome.

There is an EU countersuit pending to the original U.S. case, alleging that Boeing has benefitted from various federal and state subsidies. However, the WTO will not rule on that matter until 2020.

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