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Statement of USTR General Counsel Tim Reif about the United States Victory in Landmark WTO Dispute

Statement of USTR General Counsel Tim Reif

Regarding United States Victory in Landmark WTO Dispute
Washington, DC
May 18, 2011

**As Prepared for Delivery**

“Good morning. Thank you all for being here today. I am very pleased to announce that in a landmark decision, the World Trade Organization (WTO) Appellate Body has found that Airbus received $18 billion in subsidies that harmed the United States and our aerospace industry – namely, Boeing, its workers and suppliers. This report confirms that for decades the European Union member states France, Germany, Spain, and the United Kingdom, have provided massive amounts of market-distorting launch aid and other subsidies that were inconsistent with WTO rules. Today’s decision also affirms the Obama Administration’s approach to trade enforcement and holding our trading partners accountable.

“The WTO Appellate Body confirmed the underlying panel findings that European government subsidies have supported the creation of every model of large civil aircraft that Airbus has produced. Those subsidies have significantly distorted the global market for large civil aircraft. The Appellate Body agreed that those subsidies have caused adverse effects to the United States, including lost sales and lost market share for Boeing. Without those illegal subsidies, none of the large civil aircraft manufactured by Airbus would have been produced when and as they were.

“This definitive victory will benefit American aerospace workers who for decades have had to compete against a heavily subsidized Airbus. Today’s report holds our trading partners accountable and helps level the competitive playing field with Airbus. This confirms that none of the launch aid provided to Airbus was consistent with Europe’s WTO obligations. We expect the European Union and the Airbus governments to refrain from future launch aid disbursements.

“The Appellate Body report is clear about the serious harm caused by these massive illegal subsidies to Airbus even as it revised the underlying findings from $20 billion to $18 billion. In an industry where selling 50 airplanes can mean the difference between a great year and a terrible year, the subsidies caused Boeing to lose sales that involved hundreds of airplanes. Specifically, the Appellate Body confirmed that Boeing lost sales involving hundreds of aircraft purchased from Airbus by easyJet, Air Berlin, Czech Airlines, Air Asia, Iberia, South African Airways, Thai Airways International, Singapore Airlines, Emirates Airlines and Qantas. The Appellate Body also confirmed that Boeing lost significant market share in some of the biggest airplane markets in the world, including Europe, China, and Korea.

“The Appellate Body confirmed that launch aid and other subsidies significantly distorted the launch decisions Airbus made for more than 40 years. In other words, Airbus was able to bring to market each of its models of aircraft when and as it did because of the illegal subsidies that it received. That tipping of the scales gave Airbus an unfair advantage. And it led to massive lost sales and lost market share for Boeing. These losses have meant lost jobs at Boeing and at the thousands of U.S companies that supply Boeing. The Obama Administration pursued this case for those American workers and companies.

“In closing, I would take this opportunity to reiterate this Administration’s resolve to make sure our trading partners play by the rules. President Obama and Ambassador Kirk are committed to enforcing our trade agreements, including, where necessary, through dispute settlement consistent with the rules-based global trading system at the World Trade Organization. Protecting the rights of American manufacturers, workers, farmers, ranchers, and services providers under our trade agreements is a priority for the Obama Administration.”