WTO special report

Boeing, arguing at the World Trade Organisation through the United States government, alleges, in essence, that the European practice of providing so-called Reimbursable Launch Investment to programmes including the Airbus A380 are illegal under WTO rules, on the grounds that these loans, while repayable, are made at interest rates lower than what Airbus could expect to pay to normal, commercial banks. Similarly, Boeing alleges that the European practice of providing financial support to infrastructure development and research programmes necessary for the realisation of projects like the A380 also represent illegal government subsidy.

Aibus A380 Airbus A350XWB
Airbus A330-200F Airbus A330 tanker

Clockwise from top left Airbus A380, Airbus A350XWB, Airbus A330 tanker, Airbus A330-200F

Boeing is complaining about "illegal subsidies" received by Airbus

 

In June 2010, the WTO ruled on the US/Boeing case against Europe/Airbus. As appeals are still being heard, the ruling remains confidential to the parties involved. However, according to Boeing it can be interpreted as saying:

  • Launch aid for every Airbus programme has been deemed illegal and damaging to the US aerospace sector;
  • “Prohibited” A380 launch aid must be withdrawn “without delay”;
  • As a matter of legal principle, aircraft programmes must be funded on commercial terms; and,
  • Government funding of Airbus infrastructure and R&D programmes is illegal.

According to Boeing executive vice-president and general counsel Michael Luttig: "Each and every instance of launch aid that the US challenged was held to be illegal. The [WTO] panel said that without the illegal subsidies it received, Airbus would not have the aerospace market share it now enjoys. This ruling will alter the competitive landscape in the aerospace industry forever, forcing Airbus to compete in the marketplace on the same terms as Boeing."

Luttig added: "Under [the] decision, Airbus must repay the $4 billion in illegal launch aid it received for the A380 or restructure the A380's financing to proven commercial terms. Likewise, Airbus must abandon its plans to finance the A350 through the use of illegal subsidies.

“The WTO rejected all excuses for continuing launch aid, the most pernicious form of subsidy Airbus receives, as well as all other forms of subsidies Airbus and parent EADS use for unfair advantage in the commercial airplane market and in defense markets for military-derivative aircraft. Airbus must now compete on its own, without the assistance of European taxpayers, assistance the US estimates has exceeded $200 billion in value to Airbus."

In Pictures: Airbus A330

In Pictures: Boeing 787

Testing the Boeing 787 Dreamliner
Testing the Boeing 787 Dreamliner
Testing the Boeing 787 Dreamliner
Testing the Boeing 787 Dreamliner
Air India Boeing 787 delivery
Air India Boeing 787