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United States Prevails in Showing EU Subsidies to Airbus Continue to Break WTO Rules

On Appeal, WTO Confirms EU Failed to Comply with WTO Rules and Continues to Breach WTO Obligations with Massive Subsidies to Airbus                                                                                                         

Washington, D.C. – The Trump Administration today achieved an important victory in its World Trade Organization (WTO) dispute with the European Union (EU) and four of its member States regarding subsidies to Airbus.  In December 2011, the EU claimed to have removed the more than $18 billion in subsidized financing to Airbus that the WTO had previously found to be WTO inconsistent.  The United States disagreed and in September 2016, a WTO compliance panel found that the EU had failed to comply, finding that only two of the 36 “steps” the EU claimed to have taken to comply were even “actions.”

The WTO appellate report confirmed today that the United States was correct; the EU remains out of compliance with its WTO obligations.

“President Trump has been clear that we will use every available tool to ensure free and fair trade benefits American workers,” Ambassador Robert Lighthizer said. “This report confirms once and for all that the EU has long ignored WTO rules, and even worse, EU aircraft subsidies have cost American aerospace companies tens of billions of dollars in lost revenue. It is long past time for the EU to end these subsidies. Unless the EU finally takes action to stop breaking the rules and harming U.S. interests, the United States will have to move forward with countermeasures on EU products.” 

The appellate report issued today found that EU subsidies to high-value, twin-aisle aircraft have caused serious prejudice to U.S. interests.  The report found that billions of dollars in launch aid to the A350 XWB is causing significant lost sales of Boeing 787 aircraft.  The report found that subsidies to the A380 continue to cause significant lost sales of Boeing 747 aircraft, as well as impedance of exports of Boeing very large aircraft to the EU, Australia, China, Korea, Singapore, and UAE markets.  In addition, the EU did not appeal findings by the compliance panel that certain regional infrastructure grants cause adverse effects to the U.S. industry.

Additional Background Information

In May 2011, the Appellate Body confirmed that the EU and four of its member States (Germany, France, the UK, and Spain) conferred more than $18 billion in subsidized financing to Airbus and had caused Boeing to lose sales of more than 300 aircraft and market share throughout the world.  In fact, in looking at the effect of the EU subsidies, the original WTO panel that first heard the case and the Appellate Body agreed that “[w]ithout the subsidies, Airbus would not have existed … and there would be no Airbus aircraft on the market.  None of the sales that the subsidized Airbus made would have occurred.”  Nothing in today’s compliance appellate report alters these findings. 

In contrast, the WTO rejected the EU assertion in the EU’s counter-complaint that U.S. subsidies were responsible for the viability of Boeing’s large civil aircraft production. A compliance panel found that only a single Washington tax measure was inconsistent with WTO rules, and the United States has appealed that limited finding.

The Boeing Company is the only American producer of large civil aircraft and is the largest single U.S. exporter.  Boeing is headquartered in Chicago, IL, and has major facilities around the country, including in Washington and South Carolina.  The company employs more than 140,000 people and delivered an industry record 763 commercial aircraft while booking 912 new orders in 2017.  Boeing is the largest American manufacturer of commercial jetliners.

 

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