In the final report in the "Airbus case" (DS 316: Measures affecting Trade in Large Civil Aircraft) the WTO panel has found that European support did not result in any job losses in the United States or lost profits to the US aircraft industry. The WTO panel has rejected the allegation that support for Airbus caused "material injury" to the US aircraft industry. It has found that EU support did not damage Boeing’s pricing or profitability and did not lead to a loss of jobs at the company. The panel’s findings on the economic effects of Airbus’ funding on the US aircraft industry are limited.
"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." said EU Trade Commissioner Karel De Gucht.
The panel has found that the use of Repayable Launch Investment (RLI) as a financing system is fully compatible with WTO rules, as long as the terms of financing are based on market conditions. It has nevertheless found certain RLI measures, in particular contracts dating from the 1970s and 1980s, when Airbus was being established, to have contained an element of subsidy. The EU will now closely examine the panel's recommendations on this issue.
The European Commission is however disappointed with certain of the panel's findings, in particular its finding that part of the RLI provided for the A380 aircraft constitutes an export subsidy and that certain infrastructure measures of general nature can be classified as actionable subsidies.
The EU has yet to decide whether to appeal these and other adverse findings, but will do so in the near future.
Extracts from the Report
1. On 'no material injury' to US aircraft industry:
"[T]he United States has not established … that, through the use of the subsidies, the European Communities and certain EC member States cause injury to the United States' domestic industry" (Para 8.4)
2. On 'compatibility of Reimbursable Launch Investment':
"[W]e see nothing inherent in the LA/MSF contracts which, in and of itself, renders tem a form of financing that by definition will always involve below-market interest rates… LA/MSF is not synonymous with any particular subsidy intensity." (Para. 7.532)
LA/MSF: "Launch Aid / Member State Financing" i.e. Reimbursable Launch Investment.
From 1992 onwards, the EU and the US were bound by a bilateral agreement which regulated government support for large civil aircraft. The US unilaterally dropped this agreement in October 2004 and started WTO litigation. This report of the WTO panel, which began its work in 2006, marks the end of this first phase of litigation. The parties now have up to 30 days to decide whether or not to appeal the findings of the report.