WTO says EU failed to comply with Airbus subsidy ruling

Thu Sep 22, 2016 4:09pm EDT
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By Tom Miles and Tim Hepher

GENEVA/PARIS (Reuters) - The World Trade Organization said on Thursday the European Union had failed to rein in billions of dollars in subsidies to planemaker Airbus (AIR.PA: Quote), ratcheting up tensions in the battle for airliner orders worth trillions of dollars a decade.

The ruling is part of a series of tit-for-tat transatlantic complaints about aircraft subsidies that together make up the world's largest trade dispute, still raging after 12 years of bitter arguments over support for Airbus and its rival Boeing.

The WTO said the EU and four nations - Britain, France, Germany and Spain - had failed to comply with earlier rulings against all but two of 36 contested measures, including billions of dollars of European government loans to Airbus.

The loans were a "genuine and substantial" cause of significant lost sales for Airbus's U.S. competitor Boeing, it said.

In a blow to Europe's long-held belief that its newest and costliest jetliner, the A350, fell outside the case, the WTO for the first time said it had been subsidized but rejected U.S. claims it fell into the most toxic category of "prohibited" aid.

It adopted the same pattern for the A380, the world's largest jetliner, which has always been at the heart of a case that already runs to thousands of pages in rulings and appeals.

U.S. officials said Airbus had failed to undo subsidies worth $22 billion, including $4 billion for the A350, on which Airbus's prospects in the wide-body jet market largely depend.

European industry officials dispute those numbers, saying they overstate the amount of support at stake within the loans.   Continued...

An Airbus logo is pictured on the company booth during the European Business Aviation Convention & Exhibition (EBACE) at Cointrin airport in Geneva, Switzerland, May 24, 2016.  REUTERS/Denis Balibouse