Saturday, 20 July, 2019

Boeing: WTO Ruling Could Lead To Biggest Retaliatory Tariffs Ever

DEVELOPING NEWS: WTO rules EU failed to stop subsidies on some Airbus aircraft Boeing: WTO Ruling Could Lead To Biggest Retaliatory Tariffs Ever
Ginger Lawrence | 16 May, 2018, 10:25

As Donald Trump threatens European companies with sanctions following his withdrawal from the United Nations framework agreement with Iran on its nuclear programme, the World Trade Organisation Appellate Body has concluded that Boeing's complaint of illegal subsidies to Airbus by some European governments is largely unproven under its rules.

This landmark ruling by the WTO Appellate Body is the final decision in this case, which was initiated in 2006.

It said in a statement that, "This is expected to be the largest-ever WTO authorization of retaliatory tariffs".

The WTO report specifically says that the Airbus subsidies hurt Boeing through lost sales of large widebody jets to several major global airlines and in markets such as the European Union, Australia, China and the United Arab Emirates.

The WTO dismissed the appeal from Airbus in its marathon spat with USA rival Boeing, both of which have accused each other of receiving illegal subsidies.

The authorized tariffs are likely to total billions in duties per year, unless and until Airbus addresses the illegal subsidies it received from European governments for its most recently launched airplanes. For a claim to stick at the WTO, subsidies must be found not just to exist but to have caused real harm.

The WTO said that the EU and four of its member states had provided $18bn in illegal state aid to the European aircraft maker to help launch the world's largest airliner, the A380, and its new long-haul model the A350.

"This report confirms once and for all that the European Union has long ignored WTO rules, and even worse, European Union aircraft subsidies have cost American aerospace companies tens of billions of dollars in lost revenue", US Trade Representative Robert Lighthizer said in a statement.

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The two companies have been locked in a cycle of appeals and rulings for 14 years.

"The commercial success of products and services should be driven by their merits and not by market-distorting actions".

WTO's ruling on EU's failure to comply with its prior recommendations may trigger US retaliatory sanctions, whose level would be determined by WTO arbitrators. Airbus alleges $13.7 billion in illegal tax breaks for Boeing between the 787 and 777 aircraft.

The exact amount of allowed United States retaliation will be determined by a separate WTO process that could take months or even up to a year. The stock fell 0.9 percent to 96.25 euros at the close in Paris. Boeing has in the past shown complete disregard by ignoring the recommendations and continuing with their illegal behavior. It has meanwhile levelled significant subsidy claims against Boeing.

Originally, Boeing argued that the EU's unlawful aid to the two plane programs came to $22 billion.

"Companies should not have to compete with governments - that is what this case is about", said Robert Novick, co-managing partner at Boeing's trade lawyers WilmerHale.

WTO's ruling on Tuesday is only the first in the drawn-out dispute between Boeing and Airbus.