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WTO rules on Airbus subsidies

Fri., Sept. 4, 2009, 11:27 a.m.

Sealed ruling reportedly finds illegal aid

The World Trade Organization handed the United States and European Union an intial decision in the long-running dispute over government financing for airplane makers, but didn’t reveal the result of the confidential ruling.

The trade body is ruling on a U.S. complaint that asserted Airbus received an unfair boost from billions of dollars in European government financing to develop new airplanes.

The ruling could set important precedents on how far governments can go to support the aviation industry. But appeals could take years, and the companies must wait for a decision next year in an Airbus challenge to what it sees as unfair U.S. government support for Boeing. The complexity of the two cases leads some observers to think the issue is ultimately more likely to be resolved by negotiations between the parties than by rulings.

Both Washington and Brussels confirmed they received the ruling, but said little else.

“Because the interim report is confidential, we cannot discuss the contents,” said Deborah Mesloh, deputy assistant U.S. trade representative in Washington.

Members of Congress, however, reacted to a report in the Wall Street Journal from an anonymous source that said Airbus had received illegal subsidies in the form of “launch aid” for the development of its A380 passenger jet.

The reaction broke down not on partisan lines but on which aerospace giant was responsible for jobs in the congressional district or state.

Sen. Maria Cantwell of Washington, home of Boeing assembly plants. said the ruling could “help restore true competition” among airplane manufacturers.

“Boeing makes a competitive product but the market was being distorted by subsidies to Airbus,” Cantwell said. “Now, with this ruling, the best product stands a better chance of winning.”

Sen. Richard Shelby of Alabama, where Airbus has promised to build an assembly plant if it wins a Defense Department contract to build the next military air-refueling tanker, said the ruling was preliminary, and deals with commercial not military planes.

“Whatever its findings, they should not affect the upcoming tanker acquisition, and must not divert our focus from the most important consideration in that task – providing the warfighter with the best, most capable aircraft,” Shelby said.

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