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2014 Media Kit
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Main conclusions of WTO panel on Airbus aid

By: | at 08:00 PM | Channel(s): International Trade  

The following are the main conclusions of the World Trade Organization panel that ruled in the complaint brought by the United States against the European Union over aid for Airbus civil aircraft.

The report, of more than 1,000 pages, was published on Wednesday after being issued confidentially to the United States and EU on March 23. The panel, which was chaired by Uruguay’s former ambassador to the WTO, Carlos Perez del Castillo, was formed in 2005.

The United States had complained that the development and marketing of Airbus airliners was only possible thanks to a programme of “launch aid” and other financial support by the EU and some of its member states on non-commercial terms.

It said this aid comprised illegal subsidies, which hurt the U.S. civil aircraft industry by depriving it of market share.

“Launch Aid”

• The panel agreed that support for the Airbus A300, A310, A320, A330, A340, A380 airliners constituted launch aid.

• It did not agree that support for the A350 was launch aid, as it did not examine the A350 programme, launched after the complaint was filed.

• It found that the United States had not proved that there was a coherent, systematic launch aid programme.

Subsidies

• The panel found that German, British and Spanish funding for the A380 airliner amounted to de facto export subsidies.

• It disagreed that French aid for the A330, A340 and A380 and Spanish aid for the A340 were export subsidies.

• It did not agree that the export subsidies were based on a legal requirement to export—i.e. that funding was formally conditional on achieving exports.

• It disagreed that loans by the European Investment Bank (EIB) to the Airbus programme amounted to specific subsidies under WTO rules. * It found that some but not all infrastructure spending by member states was a specific subsidy to Airbus.

• It found that the transfer of the German government’s 20 percent stake in Deutsche Airbus to KfW, a state-owned bank, and then to MBB, subsequently acquired by Daimler , was a specific subsidy. In particular, KfW’s sale of the stake in 1992 to MBB was below market rates.

• It disagreed that debt forgiveness by the German government was a specific subsidy.

• It agreed that equity infusions by the French government and Credit Lyonnais were specific subsidies.

• It agreed that the 1998 transfer of the French state’s 46 percent state in Dassault Aviation to Aerospatiale was a specific subsidy.

• It agreed that some but not all research and development spending on the Airbus programme was a specific subsidy. (The panel estimated the total value of R&D spending at about 750 million euros, against a U.S. claim of 2 billion euros and an EU estimate of 381 million euros.)

Market Impact

• The panel found that Boeing’s share of sales of large civil aircraft to the EU market declined while Airbus’s increased over the period under review (2001-2006) * It found that imports of Boeing to the EU were displaced by Airbus.

• It found that Airbus displaced Boeing sales in Australia, China, and India, and to a lesser extent in Brazil, Mexico, Singapore, South Korea and Taiwan.

• It found that the United States did not prove that Airbus had undercut prices.

• It agreed the Airbus programme had led to the suppression or depression of prices for Boeing 737, 767 and 747 airliners but not the Boeing 777. (Suppression is when prices are prevented from rising, depression when they are pushed down.) * It agreed with the United States that launch aid shifted the risk of launching aircraft to the government from the manufacturer through non-commercial funding.

• It agreed with the United States that Airbus’s ability to launch each model was dependent on subsidies.

• It agreed that Airbus could not have marketed planes when it did without specific subsidies from the EU, Britain France, Germany and Spain.

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