A vast swathe of European aeronautics research funding was prohibited under international law, the World Trade Organisation ruled yesterday in the latest round of the long running transatlantic trade dispute between Airbus and Boeing.
R&D funding, estimated at over one billion Euros, provided to Airbus by the European Union’s Framework programme and individually by the French, German, Spanish and UK governments was illegal “specific subsidies” according to the ruling. The WTO also ruled against other aspects of funding for Airbus such as so-called ‘launch aid’ financial support.
The science funded under the contentious grants ranged from fundamental research on aircraft wakes to development work on thermoplastics to work on a ‘Friendly Aircraft Cabin Environment’. Airbus immediately pointed out that it has a counterclaim ruling, expected to appear in July. It says the ruling on research grants has “important implications for the coming report on US subsidies to Boeing”.
Previously, the European Union has said that research support from EU and member states to Airbus is much, much lower than US support for Boeing. A recent document claims:
The amounts budgeted by NASA and the Department of Defense for R&D support to Boeing’s LCA [Large Civil Aircraft] business are estimated to be at least 10 times higher. And not a cent of it is repaid.
Boeing claimed victory from the new ruling, while Airbus says that 70% of US claims against it were rejected. The European Union may yet appeal the WTO ruling.
Reaction
“This final report needs to be read together with the forthcoming interim report on subsidies provided in the US to Boeing. Only then will we have a full and more balanced picture of this dispute. The EU remains committed to a negotiated outcome to the dispute with no pre-conditions on either side.”
EU Trade Commissioner Karel De Gucht
“The United States has achieved a landmark victory in the WTO dispute brought against the European Union, France, Germany, Spain, and the United Kingdom, to redress decades of market distorting launch aid and other subsidies provided to Airbus.”
US Trade Representative Tim Reif
“The WTO has no enforcement power. The only US recourse is to levy punitive tariffs on European aircraft and other goods. But neither side wants a trade war.”