Daily Management Review

Airbus Subsidies Again Puts US And RU At Loggerheads


05/29/2018




Airbus Subsidies Again Puts US And RU At Loggerheads
The European Union had taken action to bring the funding it gives to plane maker Airbus according to the World Trade Organization rules within a few days of the ruling by the global trade dispute settlement body, said the EU to the WTO’s dispute settlement on Monday.
 
The path for a possible United States sanction in the case that is 14-year old and is related to the claims by the U.S. that the Airbus was unfairly subsidized by the EU, was cleared by the WTO ruling in favor of the U.S. on May 15 and against the EU support for Airbus.
 
In a closed-door meeting with the WTO, the EU stressed on its efforts to meet the ruling that was passed by the WTO with regards to subsidies for Airbus’ A350 which is the newest long-haul jet of Europe and its A380 which is the largest airliner in the world.
 
According to sources, the EU said it had made "contractual changes to the loan terms for the A380 and the A350XWB models of aircraft, where it was found that the repayable loans provided to Airbus for these aircrafts did not sufficiently reflect market conditions."
 
However, the U.S. does not agree with the claims of the EU because there have been four ruling previously that have not conformed with similar claims by the EU about bring in the subsidizing of the plane maker in line with the set benchmarks in the market.
 
After the latest WTO ruling in the case, the U.S. now has the option of approaching the organization to define a level of sanctions that would be allowable against the EU according to the rules of the WTO.
 
"To be clear, the U.S. preferred outcome is a mutually agreed solution with respect to aircraft financing," the U.S. official reportedly told the meeting. "The United States remains ready to hold serious discussions to achieve this goal."
 
Similar allegations have been brought against the U.S. by the EU alleging that the U.S. government has been unethically supporting Airbus rival Boeing with the WTO where the EU claims that it expects to obtain a similar legal ruling in the case sometime later this year.
 
With such a ruling there would be tit-for-tat actions by the two sides and a sanctions battle or it would also lead to what some trade experts have said - a trans-Atlantic deal on financing big civil aircraft.
 
Even though the U.S is willing to look out for countermeasures on EU products if needed, Washington desired to agree to a deal so that in the future similar subsidy related disputes could be avoided, the U.S. official reportedly said.
 
"But in our view, what is needed to resolve this dispute is not more WTO litigation but a real desire to resolve this dispute," the U.S. official said.
 
Airbus said that a settlement would be a "wise way forward" while welcoming the U.S. proposal for a settlement.
 
(Source:www.cnbc.com)






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