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Fighting Unfair Trade Practices, Winning at the WTO: Key Findings Against European Subsidies to Airbus

FIGHTING UNFAIR TRADE PRACTICES, WINNING AT THE WTO: KEY FINDINGS AGAINST EUROPEAN SUBSIDIES TO AIRBUS


In findings announced on June 30, 2010, a dispute settlement panel at the World Trade Organization ruled in favor of the United States on a case claiming that launch aid and other subsidies provided by European countries to the Airbus aircraft company over the last four decades caused adverse effects to the interests of U.S. businesses and workers. Here are key findings of the WTO panel:

Launch Aid

The WTO panel found that European governments have provided Airbus approximately 15 billion dollars (face value) in launch aid – subsidizing every model of aircraft ever produced by Airbus in the last 40 years. This preferential form of financing permitted Airbus to introduce new models by offsetting the enormous costs and extremely high risks that characterize the development of large civil aircraft.

Launch aid provided by Germany, Spain and the UK for the Airbus A380 was prohibited per se under WTO rules because it was conditioned on the export of aircraft.

Infrastructure-Related Subsidies

The WTO panel found that France, Germany and Spain provided more than one billion euros in infrastructure and infrastructure-related grants between 1989 and 2001, including the creation of land in Hamburg to allow Airbus to expand production facilities, extending an airport runway in Bremen to allow Airbus to transport wings to other facilities for aircraft assembly, and transforming agricultural land in Toulouse into industrial facilities for the assembly of the A380.

Share Transfers and Equity Infusions

The WTO panel found that France and Germany provided billions of dollars of share transfers and equity infusions to Airbus between 1987 and 1998.

Research & Development Funding

The WTO panel found that the EU, France, Germany, Spain and the UK provided over one billion euros in funding between 1986 and 2005 for research and development directed specifically to the development of Airbus aircraft.

Adverse Effects for the U.S. Aircraft Industry

The Panel found that the above subsidies caused adverse effects to the interests of the United States, in the form of lost sales – involving purchases of Airbus aircraft by easyJet, Air Berlin, Czech Airlines, Air Asia, Iberia, South African Airways, Thai Airways International, Singapore Airlines, Emirates Airlines, and Qantas – and lost market share, with Airbus gaining market share in the EU and many third country markets at the expense of Boeing.