NEW YORK—The World Trade Organization (WTO) said Thursday that American aerospace firm Boeing Co. received billions of dollars in subsidies from the U.S. government.
The conclusion, decided by a panel at the WTO, is the latest twist in the long battle between stalwarts in aerospace, Boeing, and its European rival Airbus. For over five years, the two firms jostled for position, accusing each other of receiving illegal subsidies from their governments.
The WTO ruled this week that Boeing received more than $5.3 billion in subsidies from the federal government and NASA to work on research and development of its upcoming 787 Dreamliner commercial jet aircraft and other projects.
The EU and Airbus, in their initial application, claimed that Boeing had received more than $19 billion in total subsidies since 1989, but the WTO rejected most of the EU’s claims. As a result, both sides have claimed that the ruling is in favor of their respective manufacturers.
“These subsidies have resulted in substantial harm to EU interests, causing Airbus to lose sales, depress its aircraft prices, and unfairly lose market share to Boeing,” said Karel De Gucht, the trade commissioner of the European Union, in a statement. “The detrimental costs to EU industry from this lengthy and onerous subsidization run into billions of euro.”
The conclusion, decided by a panel at the WTO, is the latest twist in the long battle between stalwarts in aerospace, Boeing, and its European rival Airbus. For over five years, the two firms jostled for position, accusing each other of receiving illegal subsidies from their governments.
The WTO ruled this week that Boeing received more than $5.3 billion in subsidies from the federal government and NASA to work on research and development of its upcoming 787 Dreamliner commercial jet aircraft and other projects.
The EU and Airbus, in their initial application, claimed that Boeing had received more than $19 billion in total subsidies since 1989, but the WTO rejected most of the EU’s claims. As a result, both sides have claimed that the ruling is in favor of their respective manufacturers.
“These subsidies have resulted in substantial harm to EU interests, causing Airbus to lose sales, depress its aircraft prices, and unfairly lose market share to Boeing,” said Karel De Gucht, the trade commissioner of the European Union, in a statement. “The detrimental costs to EU industry from this lengthy and onerous subsidization run into billions of euro.”
“Today a WTO panel confirmed what we have been saying for the last 20 years—that the subsidies that the Europeans gave to Airbus dwarf anything that the U.S. government has given to Boeing,” said U.S. trade representative Ron Kirk.
“Although today’s panel agreed with the EU in some areas, the programs it asked the United States to remove were worth only $2.7 billion,” a statement from the U.S. trade representative said.
The ruling comes a few weeks after Boeing won a U.S. Department of Defense contract totaling $35 billion to develop new fueling tanker planes, a move that EADS, Airbus’s parent company, has said is unfair.
Last year, the WTO also found that Airbus had benefited from export and tax subsidies from France, the United Kingdom, and other nations on its way to becoming the world’s largest manufacturer of commercial passenger jets. That decision claimed that Airbus received more than $15 billion in loans at below-market interest rates from EU governments, and other grants to develop its A380 Super-Jumbo jet.
Boeing and Airbus are the largest manufacturers of commercial jets, but they are facing new competition from companies in emerging markets. Brazil’s Embraer, which is a manufacturer of smaller planes, is currently developing larger commercial aircrafts. The same is underway at Canada’s Bombardier and Russia’s United Aircraft. China is reportedly developing its own commercial airliners.
Both sides have 30 days to appeal the decision, and analysts expect the countries to appeal. The Boeing-Airbus row has been the most complex and longest dispute at the WTO since its inception.
“Although today’s panel agreed with the EU in some areas, the programs it asked the United States to remove were worth only $2.7 billion,” a statement from the U.S. trade representative said.
The ruling comes a few weeks after Boeing won a U.S. Department of Defense contract totaling $35 billion to develop new fueling tanker planes, a move that EADS, Airbus’s parent company, has said is unfair.
Last year, the WTO also found that Airbus had benefited from export and tax subsidies from France, the United Kingdom, and other nations on its way to becoming the world’s largest manufacturer of commercial passenger jets. That decision claimed that Airbus received more than $15 billion in loans at below-market interest rates from EU governments, and other grants to develop its A380 Super-Jumbo jet.
Boeing and Airbus are the largest manufacturers of commercial jets, but they are facing new competition from companies in emerging markets. Brazil’s Embraer, which is a manufacturer of smaller planes, is currently developing larger commercial aircrafts. The same is underway at Canada’s Bombardier and Russia’s United Aircraft. China is reportedly developing its own commercial airliners.
Both sides have 30 days to appeal the decision, and analysts expect the countries to appeal. The Boeing-Airbus row has been the most complex and longest dispute at the WTO since its inception.
