Washington, D.C. – Today, United States Trade Representative Ron Kirk issued the following statement regarding the deadline for the European Union (EU) to comply with the World Trade Organization (WTO) ruling on Airbus and the EU’s subsequent response:
“We have received the EU’s compliance notice today and will review it carefully before announcing our next step,” said Ambassador Kirk. “We will base our next steps on a careful evaluation of that announcement, and whether it demonstrates that the EU has in fact taken the steps necessary to bring itself into full compliance with the WTO decision. The WTO ruling on Airbus requires that the EU withdraw its subsidies or remove their adverse effects. The continued success of the American aerospace industry, and the jobs of hundreds of thousands of Americans who work in this highly competitive sector depend on the ability to compete on a level playing field – the level playing field assured to them by our WTO agreements. The United States intends to ensure that our valued trading partner, the EU, keeps its commitments in this and all other trade matters.”
Background:
The United States initiated this WTO dispute in October 2004 to end decades of launch aid and other subsidies provided to Airbus. A panel was established to examine the matter in May 2005. The Panel issued its report on June 30, 2010, finding that European government launch aid had been used to support the creation of every model of large civil aircraft produced by Airbus. The Panel also found that launch aid and the other challenged subsidies to Airbus have significantly distorted the global market for large civil aircraft, and that those subsidies have directly resulted in Boeing losing sales and market share.
The European Union commenced the appeal on July 21, 2010 and the Appellate Body issued its report on May 18, 2011.
The Appellate Body affirmed the WTO Panel’s central findings that European government launch aid had been used to support the creation of every model of large civil aircraft produced by Airbus. The Appellate Body also confirmed that launch aid and other challenged subsidies to Airbus have directly resulted in Boeing losing 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 European Union and in third country markets, including China and Korea at the expense of Boeing. The Appellate Body also found that the Panel applied the wrong standard for evaluating whether subsidies are export subsidies, and that the Panel record did not have enough information to allow application of the correct standard.
Following adoption by the WTO Dispute Settlement Body, the WTO recommended that the EU and the EU member states that financially support Airbus take appropriate steps to withdraw the subsidies or remove the adverse effects within six months. That period ended today.
Under WTO rules, the United States has the option of challenging the EU’s claims to have withdrawn any subsidies or eliminated their adverse effects. The United States will be examining the EU’s claims over the coming days.
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