Airbus hails WTO finding on Boeing

London
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A World Trade Organisation finding that Boeing could not have launched the 787 without government, NASA and US Department of Defense subsidies has been hailed by Airbus as victory in its long-running dispute with its US rival over the legality of government aid.

The WTO, ruling on a European Union case against the USA - filed in response to a 2004 US complaint about state aid to Airbus to develop the A380 and other models - detailed "at least" $5.3 billion worth of illegal subsidies to Boeing in the 1989-2006 period, including state of Illinois help with the cost of Boeing's corporate headquarters move from Seattle to Chicago and $2.6 billion from NASA.

According to the WTO, the large airliner market demanded Boeing replace its 767, but without illegal state support the company could not have launched an aircraft as advanced as the 787 for delivery in 2008 as promised on launch four years earlier. And, says the WTO, the resulting quality of the 787 did serious damage to sales of the Airbus A330 and the original A350.

illegal aid to boeing 1989-2006

The public release of the ruling follows the WTO's similar move in October 2010 on the US case against Europe, which found that Airbus could not have brought to market airliners of the quality that it has without state aid.

In both cases, the WTO found that state aid to the rival airframer had the result of undermining export sales of Airbus and Boeing aircraft, so the two rulings taken together suggest the effect of each side's subsidies broadly cancelled out the other's.

However, Boeing dismisses the $5.3 billion figure, putting the total at less than $2.7 billion against more than $20 billion received by Airbus, and both sides persist in fighting talk. Appeals look certain to keep the dispute going, despite Airbus's continued insistence that the competitive environment has changed so much since the cases were launched that now is the time to stop legal action and sit down to negotiations with new rivals including Brazil, Canada, China and Russia to agree a framework for the state support of national aerospace champions that has characterised the industry since the Wright brothers.

One source close to the cases adds that without such an agreement to cease hostilities, a second round of appeals will only be followed by an "endless iteration of compliance checks" as each side grudgingly adjusts its subsidy regime, forcing the WTO to evaluate the sufficiency of each move.