Panel Rejects EU’s Latest Claims that it Removed Illegal Subsidies
Washington, DC – A World Trade Organization (WTO) compliance panel today rejected the European Union’s (EU) latest claims that it complied with WTO rules by making minor changes to its massive launch aid subsidies to Airbus. The WTO recently valued the harm caused by these subsidies at $7.5 billion. Today’s findings reaffirmed that the subsidies continue to cause adverse effects, and found further that European governments even extended the subsidies by renegotiating launch aid with Airbus. Furthermore, the WTO panel found that this massive EU corporate welfare continues to cost American aerospace companies significant lost revenue.
“Today’s findings confirm that, despite losing in five previous WTO reports, Europe remains more focused on generating meritless litigation than it is in addressing the massive subsidies to Airbus that continue to harm the U.S. aerospace industry and its workers,” U.S. Trade Representative Robert Lighthizer said. “The EU’s frivolous case proves that strong action is needed to convince the EU that its interests lie in eliminating these market-distorting subsidies now and in the future, so that our industries can compete on a level playing field.”
Today’s report marks the sixth time that the WTO has found that EU subsidies to Airbus break WTO rules. In this latest iteration, the EU tried yet again to show that minor changes to its Airbus subsidization package were enough to eliminate the WTO inconsistencies identified in the past. The WTO panel again rejected all of these claims and instead found that European governments had extended the subsidies by renegotiating the launch aid in a way even more favorable to Airbus. As a result, the panel found that the subsidies caused the Boeing 777, 787, and 747 aircraft to lose sales and market share to Airbus – sales that would have meant more revenue for U.S. producers and jobs for U.S. workers.
As a result of the EU’s failure to address these subsidies, on October 18, the United States imposed tariffs of 10 percent on large civil aircraft and 25 percent on agricultural and other products, with the bulk of these tariffs being applied to imports from France, Germany, Spain, and the United Kingdom – the four countries responsible for the illegal subsidies. In light of today’s report and the lack of progress in efforts to resolve this dispute, the United States is initiating a process to assess increasing the tariff rates and subjecting additional EU products to the tariffs. USTR will publish a Federal Register Notice regarding that process later this week.
Additional Background Information
In May 2011, the WTO 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 that this caused Boeing to lose sales of more than 300 aircraft and significant market share throughout the world. On October 14, the WTO authorized the United States to apply $7.5 billion per year in countermeasures – nearly twice the largest previous award in WTO history. Accordingly, the United States recently began applying tariffs on EU goods. Click here to view the list of products that are subject to additional duties.
In contrast, the WTO rejected the EU assertion in the EU’s counter-complaint that U.S. subsidies were responsible for the viability of large civil aircraft production in the United States. The WTO found that only a 0.19 percent reduction in a Washington State tax was inconsistent with WTO rules.