A final ruling by the World Trade Organization (WTO) that the European Union illegally helped Airbus with $22 billion in subsidies authorizes the United States to impose retaliatory tariffs to recover losses suffered by USA aircraft manufacturer Boeing, according to a press release by Boeing on Tuesday.
"This report confirms once and for all that the European Union has long ignored WTO rules, and even worse, European Union aircraft subsidies have cost American aerospace companies tens of billions of dollars in lost revenue", US Trade Representative Robert Lighthizer said in a statement.
But the WTO also dismissed USA claims that loans for the A320 and A330, the most popular Airbus models, were also costing Boeing significant sales, thus narrowing the scope of the ruling. "The EU will now take swift action to ensure it is fully in line with the WTO's final decision in this case".
The litigation adds to the tension between the US and Europe, two once-cooperative trade partners that are already sparring over Trump's steel and aluminum tariffs and his decision to back out of a nuclear treaty with Iran.
The WTO appellate body upheld the compliance panel's finding in 2016 that Airbus paid a lower interest rate on financing for the development of its latest aircraft, the A350, than it would have obtained on the commercial market, and that this below-cost financing provided by the French, German, Spanish and United Kingdom governments provided a benefit to Airbus that constituted subsidies. The bloc compounded the issue with below-market loans for the planemaker's marquee A350 jetliner. Boeing claims that the EU provided the European aerospace giant more than $22 billion in illegal subsidies.
"The other half coming out later this year will rule strongly on Boeing's subsidies and we'll see then where the balance lies", he said.
Airbus chief executive Tom Enders called the ruling a "significant legal success for the European aviation industry". The stock fell 0.9 percent to €96.25 at the close in Paris. The appellate body also found Boeing sales were largely unscathed because subsidies of Airbus' A300, A310, A320 and A330/340 aircraft had ceased with the 2011 order. Boeing fell less than 1 percent to $342.09 at 12:37 p.m.in NY, recovering from losses logged before the decision was issued. The trade body also upheld an earlier finding that the European Union aid had no adverse affect on the market for single-aisle jet sales, the largest source of profit for Boeing and Airbus.