'EU paid Airbus $18bn in illegal subsidies'

Airbus A380

'EU paid Airbus $18bn in illegal subsidies'

The World Trade Organization (WTO) opened the door for the Trump administration to impose billions of dollars in retaliatory sanctions on European imports with a landmark ruling on Tuesday that Europe had illegally subsidised the aircraft giant Airbus to the detriment of its United States competitor Boeing.

The Geneva watchdog, however, had dismissed USA claims that the loans for the most popular models of Airbus, the A320 and A330, were costing aignisignif sales to Boeing.

"Today's report is really only half the story", Airbus CEO Tom Enders says, as the WTO is expected to issue a ruling in the coming months on an European Union case against the USA over subsidies provided to Boeing, which could rebalance today's outcome.

The shares of Airbus had fallen shortly after the WTO issued its findings and were poised to close down around 0.86 percent.

The WTO ruled in favor of the United States in 2011, and told the European Union to stop providing the subsidies.

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Malmstrom added: "Also, we look forward to the upcoming ruling by the appellate body on USA compliance with the WTO findings of the massive and persistent government support to Boeing". That figure includes the many subsidies that the WTO said were lawful.

Boeing predicted such tariffs could reach billions of dollars a year starting as early as 2019.

Airbus General Counsel John Harrison said: "Airbus recognizes the importance of the WTO and the Appellate Body's findings and will do what is necessary to correct any errors and this report confirms the efforts we are making".

Barring a settlement, both sides are expected to push for billions of dollars in sanctions annually, but the amounts will depend on arbitration, expected to take around a year.

"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", the manufacturer continued.

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Airbus disputes those numbers, saying they overstate the amount of support embedded in the contested loans.

Boeing may lose upward of $20 billion in aircraft sales because of the USA withdrawal from the nuclear pact. It has meanwhile levelled significant subsidy claims against Boeing. As airlines expand into the Middle East and China, both companies will be vying for new business, he said. It is anticipated that USA tariffs will be authorized up to the amount of annual harm the subsidies are determined to cause.

But U.S. sources say the A380 aid meant Airbus was able to gamble on building the world's largest jetliner without facing the financial consequences of market failure, bolstering its balance sheet in a way that disadvantages Boeing to this day.

"The result is simple: Airbus pays back its loans, Boeing pays back nothing and continues to exploit the generosity of the USA taxpayer", outgoing Airbus CEO Tom Ender said.

"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.

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