By NICOLA CLARK, May 18, 2011
PARIS — A World Trade Organization appeals panel has overturned a key part of the 2010 ruling that found Airbus benefited from billions of dollars in illegal subsidies, European officials said Wednesday.
The panel’s decision, which was to be released publicly later Wednesday, states that loans from European governments to build the A380 superjumbo jet were not prohibited under global trade rules, according to officials who had seen it.
“The U.S. central claim that Airbus received prohibited export subsidies has been dismissed in its entirety,” Karel De Gucht, the European Union’s trade commissioner, said in a statement. “I am particularly pleased with this important result.”
Mr. De Gucht acknowledged that the trade body had upheld other parts of the earlier decision, including that government support to Airbus had caused its American rival, Boeing, to lose aircraft sales. He insisted, however, that the economic impact of those subsidies was “very limited” and said Brussels would now study the report “to determine the next steps in this dispute.”
The U.S. Trade Representative in Washington was to brief reporters later Wednesday.
But the latest ruling appeared to upend what the Americans had considered the one of the most crucial parts of the landmark case: Namely, that loans Airbus received from Germany, Spain and Britain for the A380 were prohibited because governments expected a significant export market for the twin-deck planes when they granted the support. The United States had hoped to get the loans — known as “launch aid” — banned by the global trade body and to force Airbus to either repay or refinance the loans on ordinary commercial terms.
The W.T.O. defines two broad categories of subsidies: those that are “prohibited” and those that are “actionable” — that is, subject to legal challenge or to countervailing measures such as punitive tariffs. Prohibited subsidies are those which are specifically designed to promote exports or to encourage production using domestically made components. Under W.T.O. rules, any prohibited subsidy must be withdrawn within 90 days of the adoption — by all 153 member states — of a dispute panel’s findings.
Actionable subsidies, meanwhile, are not prohibited per se, but they can be challenged if the complaining country shows that the subsidy caused material injury — a loss of jobs, profit or production capacity — or “adverse effects” to its industry, such as a loss of export market share or sales.
Boeing has contended that the subsidies helped Airbus vault past it in 2003 to become the world’s largest plane maker.
Under the current terms of the government loans, Airbus makes its repayments as its planes are delivered to customers. Airbus has delivered 43 of 244 orders for the A380. The vast majority of those sales have been to non-European customers.
“This is a big win for Europe,” Thomas Enders, the Airbus chief executive, said in a statement. “It is good to see that the WTO has fully green lighted the public-private partnership instruments with France, Germany, Spain and the UK. We now can and will continue this kind of partnership on future development programs.”