Titanic Airbus Boeing trade war

September 15, 2010

, GENEVA, Sep 15 – An acrimonious multi-billion dollar battle between aviation giants Airbus and Boeing will shift up a gear on Wednesday when the World Trade Organization issues an initial ruling on US subsidies.

The much-awaited ruling on the tit-for-tat dispute comes a year after the WTO issued a similar confidential interim ruling which rapped Brussels for illegally providing subsidies to Airbus, the maker of the A-380 superjumbos.

Diplomatic sources said that the WTO\’s decision on the case brought by Brussels against aid provided by Washington to Boeing is likely to bring a balance to the bitter dispute.

"This report should rebalance the situation," said a diplomat, who declined to be named.

Brussels had brought the case to the WTO on October 6, 2004, on the same day that Washington had complained against EU subsidies to Airbus. It was therefore frustrated with the time lag between the rulings on the two cases.

An Airbus spokeswoman said that the interim report could herald a negotiated settlement to the long-running dispute between the two rivals, which are at each other\’s heels for every commercial airliner order.

"Airbus is looking forward to see the European Union case finally moving forward," said Airbus spokeswoman Maggie Bergsma ahead of the ruling. "We expect the WTO to confirm that Boeing received billions of illegal subsidies."

The interim verdict, which is only issued to parties concerned, is however expected to be mixed.

"It would possibly be a rather mixed and rather complicated ruling," said the diplomat.

The EU complaint accuses Washington of violating international trade rules by funnelling subsidies to civil aviation through military research funds.

About 23 billion dollars of subsidies were masked as defence research, Brussels claimed.

But Boeing, the maker of the 787 Dreamliner, insisted that the support was above board in a statement issued hours before it sees ruling.

"We look forward to learning how the WTO has ruled in today\’s preliminary decision on US practices, none of which have the market-distorting impact of launch aid nor even approach the sheer scale of European subsidy practices," said Boeing.

The US giant also accused the Airbus of not abandoning controversial "launch aid", some of which was found illegal by the WTO in the earlier case.

"To date, Airbus and its government sponsors have defiantly resisted abandoning launch aid," said Boeing, adding that it expected Airbus to "make good on their end of the WTO bargain.

The EU has appealed against the WTO\’s earlier ruling against aid for Airbus.

Under WTO rules, the interim ruling is meant to be held confidential until the global trade body publishes the full report by its panel of dispute settlement arbitrators.

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