Brussels and Washington at Loggerheads Over Airbus, Boeing Illegal Subsidies

Both Airbus and Boeing have been in dispute for many years over alleged state subsidies for both companies by the EU and the US respectively in the highly competitive world of aircraft manufacturing.

The latest spat is the ruling by the WTO over subsidies allegedly granted by the EU and some member states to Airbus, including "Launch Aid" and "Member State Financing," European Investment Bank loans, "debt forgiveness" and research as well as development funding, worth US$22 billion.

The current dispute has been going on for over ten years, amid cries from both sides of the Atlantic that both the EU and the US are giving subsidies to their respective airframe manufacturers. In the latest twist, the WTO has ruled that the US had demonstrated that the European Union "to take appropriate steps to remove the adverse effects" of the subsides complained of by Boeing.

The WTO said the EU, as well as Britain, France, Germany and Spain, had failed to comply with earlier rulings against all but two of 36 contested measures, including billions of dollars of European government loans to Airbus.

The European Commission has said it will appeal the ruling.

​'Sweeping Victory'

US Trade Representative Michael Froman said: "This report is a sweeping victory for the United States and its aerospace workers. We have long maintained that EU aircraft subsidies have cost American companies tens of billions of dollars in lost revenue, which this report clearly proves. We will not tolerate our trading partners ignoring the rules at the expense of American workers and their families.

"Today's WTO report reinforces the value of international trade rules that ensure US companies and workers can compete and sell their world-class products and services on a level playing field. We expect the EU, Germany, France, the United Kingdom, and Spain — some of our closest trading partners — to respect WTO rules. We call on them to end subsidized financing of Airbus immediately."

The ongoing row between the EU and the US — with the threat by Washington to impose trade tariffs on EU imports into the US — comes at a critical time for both sides, as negotiations continue over the Transatlantic Trade and Investments Partnership (TTIP), a comprehensive trade deal between the EU and the US.

TTIP is supposed to allow for free trade between the EU and the US, but has hit opposition because critics in the EU say it givens US-based multinational enormous and undemocratic powers, including the right to sue EU states for loss of profits. With both Washington and Brussels crying foul over Airbus and Boeing, opponents of TTIP will ask if there will ever be a level playing field in trade between the two continents.