The World Trade Organization's Appellate Body ruled Tuesday that the European Union continued providing illegal subsidies to aircraft giant Airbus in defiance of an earlier WTO ruling, opening the door for the U.S.to retaliate and closing the book on a long and winding 14-year legal saga.
The WTO has yet to rule on a related case charging that tax breaks by the USA state of Washington - where most Boeing manufacturing facilities are located - amounted to an illegal subsidy, the release said. "The commercial success of products and services should be driven by their merits and not by market-distorting actions", said Dennis Muilenburg, Boeing chairman, president and CEO. The Geneva-based WTO can't force nations or companies to drop payments that violate trade rules, but it can authorize retaliatory measures to pressure governments into complying with its rulings. The bloc compounded the issue with below-market loans for the planemaker's marquee A350 jetliner.
Tuesday's finding wraps up a case against the EU dating back to 2004 and means the US can now seek WTO backing to impose sanctions on an as yet unspecified list of European goods.
Airbus said in a statement released after the WTO ruling that it would take steps to ensure the aid complies with the decision, and predicted any eventual sanctions would be minor. "Today's decision ends the dispute and clears the way for the United States Trade Representative (USTR) to seek remedies in the form of tariffs against European imports to the United States". The stock fell 0.9 percent to 96.25 euros at the close in Paris.
The authorized tariffs are likely to total billions in duties per year, unless and until Airbus addresses the illegal subsidies it received from European governments for its most recently launched airplanes.
"Today's report is really only half the story", Airbus CEO Tom Enders says, as the WTO is expected to issue a ruling in the coming months on an European Union case against the USA over subsidies provided to Boeing, which could rebalance today's outcome.