The combination from file photos shows at top the first production model of the new Boeing 787 airplane being unveiled on July 8, 2007, at Boeing’s assembly plant in Everett, Wash., and at bottom, visitors having a look at the Airbus A380 air plane at the 4th Airport Days on Sept. 16, 2007, in Hamburg, Germany. The World Trade Organization on Friday ruled in Boeing’s favor in one of the the biggest commercial disputes in modern history.
Washington — In a victory for Boeing Co., the World Trade Organization sided with the American aviation giant Friday in finding that European countries had provided billions in illegal subsidies to chief competitor Airbus.
The preliminary ruling by the Geneva-based WTO, although expected to be challenged by the European Union, could begin to shake up the $3.2 trillion global market in new jetliners, in which Airbus has overtaken Boeing. The next shoe to drop will be a decision that may well go the other way: The international trade body will rule next year in an Airbus challenge to what it sees as unfair U.S. government support for Boeing.
Friday’s decision confirms a complaint by the United States, filed in 2004, that “all Airbus aircraft have received illegal subsidies and that these have caused material harm to Boeing,” said Rep. Norm Dicks, D-Wash., among those briefed by U.S. trade officials on the yet-to-be- released decision.
Another Washington state lawmaker, Democratic Rep. Jim McDermott, said, “We learned in a WTO ruling that Airbus has enjoyed an unfair competitive advantage over Team Boeing for decades.”
However, European officials who were briefed had a somewhat different take on the ruling from American lawmakers and officials, suggesting that many of the complaints lodged by the U.S. had been dismissed. They also said the kind of easy-term loans provided by European governments to Airbus were in some instances seen as a permissible form of financing.
A U.S. official, speaking on condition of anonymity because the ruling was not made public, said the report was clearly not in Airbus’ favor and was a rebuke to decades of European government help.
Boeing has headquarters in Chicago, but its operations include sites in the Seattle area and in Wichita, Kan.
The WTO finding was the first step in a process that could take years to produce a final result.
The organization doesn’t have the power to impose sanctions itself, but it can allow a nation that has been harmed — in this case the U.S. — to raise tariffs or impose other barriers to imports from an offending country or countries.
And that wouldn’t be limited to aircraft. It could also include, for instance, purses, sweaters or French wines. The amount of such tariffs could be high enough to offset the damages done by the illegal practices.
The American case protested “launch aid,” easy-term loans that were extended primarily by France, Britain, Spain and Germany to help Airbus develop new jetliners as it overtook Boeing as the world’s top producer of commercial airplanes.
“The United States has always maintained that the European governments have provided unfair subsidies to Airbus that harm U.S. interests,” said Deborah Mesloh, deputy assistant U.S. trade representative in Washington.
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