Boeing

WTO issues final ruling in Airbus illegal subsides case

WTO determines EU has refused to honor rulings on massive European subsidies to Airbus. U.S. authorized to seek billions in retaliatory tariffs on imports from Europe

May 15, 2018 in Commercial

The World Trade Organization (WTO) ended a 14-year dispute when it released its final decision that found the European Union (EU) has failed to honor multiple previous rulings and has provided more than $22 billion of illegal subsidies to European aircraft maker Airbus. After examining this case for more than a decade, the WTO determined the EU must end its unfair business practices and remedy the ongoing harm caused by the illegal subsidies.

This landmark ruling by the WTO Appellate Body is the final decision in this case, which was initiated in 2006. This decision ends the dispute and clears the way for the United States Trade Representative (USTR) to seek remedies in the form of tariffs against European imports to the United States. Tariffs could be scheduled as early as 2019. This is expected to be the largest-ever WTO authorization of retaliatory tariffs.

“This final ruling sends a clear message: disregard for the rules and illegal subsidies are not tolerated. The commercial success of products and services should be driven by their merits and not by market-distorting actions,” said Dennis Muilenburg, Boeing chairman, president and CEO. “Now that the WTO has issued its final ruling, it is incumbent upon all parties to fully comply as such actions will ultimately produce the best outcomes for our customers and the mutual health of our industry. We appreciate the tireless efforts of the U.S. Trade Representative over the 14 years of this investigation to strengthen the global aerospace industry by ending illegal subsidies.”

The U.S. government, with Boeing’s full support, has complied with WTO rulings stemming from the two cases the EU brought against the United States. One case has already ended in favor of the United States. In the other, the vast majority of the allegations the EU made against the United States and Boeing were dismissed. Where there were narrow rulings against U.S. practices, they have been fully addressed to the WTO’s satisfaction.

Just one finding against the United States now remains before the WTO, which concerns a Washington state tax measure. It is under appeal and should be decided later this year or in early 2019. Boeing believes that ruling will be reversed, but if not, Boeing has pledged to do whatever necessary to come into full compliance in the interest of upholding rules-based trade, which is essential to fairness and the future prosperity of the global aerospace industry.