September 16, 2010 in Business

Europe says Boeing loses in world trade court ruling

Ruling condemns heavy subsidies, according to French ministers
Frank Jordans Associated Press
Associated Press photo

In this photo taken Dec. 15, 2009, a chase plane flies beside a Boeing Co. 787 airplane as the 787 takes off on its first flight at Paine Field in Everett.
(Full-size photo)

Engine surge grounds 787

 CHICAGO – Boeing Co. says it has grounded one of the new 787s it is testing because of an engine problem.

 Boeing says the plane was getting ready for takeoff in Roswell, N.M., when its engine surged. Spokeswoman Yvonne Leach says the crew and the plane were not in any danger. Rolls-Royce sent a new engine that was being installed on the plane on Wednesday.

 She says it’s too soon to know how soon the plane will fly again, or if the 787 testing schedule will be affected. Boeing has six of the planes in flight tests and is aiming to deliver the 787 early next year, when it will be more than two years late.

 The issue was reported on Wednesday by the trade publication Aviation Week.

Associated Press

GENEVA – European officials claimed Wednesday that a preliminary decision by the world’s top trade court found that aid to U.S. aircraft maker Boeing violated international rules, leading to the prospect that the Chicago-based plane maker may have to forgo or even pay back billions in subsidies.

France’s transport and environment ministers said the confidential World Trade Organization ruling delivered to U.S. and EU officials in Geneva “condemns massive subsidies to Boeing that violate WTO rules.”

Details of the ruling weren’t made public and a final judgment isn’t expected to be released for several months.

It comes three months after the WTO found that Boeing’s European rival Airbus gained an unfair advantage through billions worth of low-interest government loans, infrastructure provisions, and research and development grants. Both Washington and Brussels have appealed that decision.

“The ruling swings the pendulum back,” the French environment and transport ministers, Jean-Louis Borloo and Dominique Bussereau, said in a joint statement. “This ruling brings enormous satisfaction to the French and European aviation industry and saves jobs and the future of this industry.”

The Office of the U.S. Trade Representative in Washington confirmed receipt of the ruling.

“This dispute has proven to be one of the most complex and lengthy disputes under the WTO,” said USTR spokeswoman Nefeterius Akeli McPherson. “As the interim report is confidential, we cannot discuss the contents.”

Officials at Boeing didn’t immediately comment.

Ahead of its release a senior Boeing official rejected suggestions that the ruling should be tied to the Airbus case, offering the way for a negotiated settlement between the two parties.

“The two cases are completely separate and deal with very specific issues,” Ted Austell, vice president trade policy at Boeing, said Tuesday.

John Clancy, an EU trade spokesman, said Wednesday’s ruling would be studied carefully before Brussels decides how to proceed. But he added that “only negotiations at the highest political levels can lead to a real solution and we hope today’s report provides momentum in that direction.”

The six-year dispute is seen as key to future funding for new plane development in a market estimated to be worth more than $3 trillion over the next two decades.

Airbus and Boeing are also vying to secure a $35 billion contract to provide aerial tankers to the U.S. Air Force.

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