No early end in sight to WTO dispute

London
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This story is sourced from Flight International
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With both sides in the long-running dispute between Europe and the USA over subsidies for their respective airframers claiming the moral high-ground following the World Trade Organisation's latest ruling, there is no sign of the case being brought to an early conclusion.

However, Ian Giles, an aviation lawyer at London law firm Norton Rose, believes that the most likely way to resolve the conflict will be through negotiation.

He points to increasing commercial pressure from airframers in the so-called BRIC countries as being one factor that could force the two parties to the negotiating table.

"Both sides are aware that increasingly, it is not just a two- horse race and China, Brazil and others are looking to enter aircraft manufacturing at a more competitive level and they need to get the WTO dispute out of the way to concentrate on being competitive for future contracts."

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Airbus and Boeing will most likely have to resolve the dispute through negotiation as they begin to face increasing pressure from the "BRIC" countries.

But Giles stresses that even if the US-Europe dispute can be brought to a relatively swift conclusion, the prospect of further litigation through the WTO cannot be ruled out. "I don't think this case will give a great deal of certainty as to the precise scope of permitted subsidies and it's likely that in the future there may be further claims both between the EU and US, and potentially against emerging aircraft manufacturers from other jurisdictions over alleged subsidies."

According to Airbus, the ruling, issued to the complainants but not the public on 31 January, will show that Boeing would not have been able to launch the 787 Dreamliner without illegal subsidies, and that illegal research and development cash support from NASA, the US Department of Defense and US taxpayers has cost Airbus at least $45 billion in lost sales.

Boeing, on the other hand, has dismissed Airbus's comments on the 787 and restated previous claims about damaging subsidies handed to Airbus by European governments.

"We would have built the 787 regardless of what NASA may or may not have done," says Boeing in regard to the European claims of composite technology research and development funding from the US space and aeronautics agency.

It adds: "[The reports] confirm the interim news from last September that the WTO rejected almost all of Europe's claims against the United States, including the vast majority of its R&D claims."

However, Boeing acknowledges that $2.6 billion of Europe's subsidy claims were upheld, although Boeing calls the ruling a "sweeping rejection" in comparison to the $20 billion of illegal subsidies - mostly reimbursable launch investment - it believes the WTO found that Airbus received in a June 2010 ruling.

Rulings in the US case versus Europe, DS316, are under appeal by both sides and thus still under wraps. The final ruling on Europe's case versus the United States, DS353, could in principle be made public in several weeks following translation, although a round of appeals is all but certain.