Sunday, September 6, 2009
According to several news reports, a World Trade Organization (WTO) dispute resolution panel issued a preliminary report on Friday finding that European subsidies given to the aerospace company, Airbus, violate WTO subsidy rules. The United States initiated the WTO proceeding in 2004 complaining that $20 billion in subsidies provided to Airbus violated the WTO Subsidies Agreement. The panel apparently agreed with the U.S. at least in part, finding that all of the "launch" subsidies, i.e., $15 billion in loans given to Airbus by European governments, were illegal export subsidies. In addition to the loans having more favorable terms, they only had to be repaid if the projects they financed were successful. The panel ruled that certain research and development aid and infrastructure support given to Airbus violated WTO subsidies rules as well. The panel's decision will have to be finalized and then either adopted by the WTO Dispute Resolution Body or appealed to the WTO Appellate Body before there is any final resolution in the matter. In the meantime, the Europeans have filed a counterclaim against Airbus's U.S. competitor, Boeing, alleging that it too has received improper subsidies in the form of military contracts, state tax breaks and grants from the space agency, NASA. A ruling in that case is expected in a few months.