The WTO has broadly upheld a ruling that Boeing Co took billions of dollars of unfair subsidies, breathing new life into an epic trade spat that has already faulted European aid to Airbus, people familiar with the matter said.
The world’s largest trade dispute, involving mutual claims of aid to the dominant planemakers, will reach a crucial point tomorrow when WTO appeal judges are expected to complete a pair of investigations by publishing their verdict on aid to Boeing.
At stake is whether the world’s largest planemakers can continue to benefit from alleged public aid for heavy investment in new aircraft, though analysts say it may be years before the complex legal processes are finally exhausted.
Tomorrow’s ruling, coupled with a parallel case on Airbus that went largely against Europe, could influence the balance of power and timing of any negotiations to bring a conclusion to the seemingly endless spat, but there are no signs of any agreement to talk.
The US is instead pressing for US$7 billion to US$10 billion in annual sanctions in its own case on Airbus. Most trade analysts say that in practice such measures would take years to unfold.
“I think they [Boeing] can do a lot to disregard the ruling, just as Airbus has been able to do an awful lot to disregard any ruling against them,” aerospace analyst Richard Aboulafia of Virginia-based Teal Group said. “I think, unfortunately, this process just isn’t working in anyone’s favor.”
The two sides accuse each other of soaking up billions of dollars in sham contracts and loans, while potential competitors in China, Canada, Russia and Japan are closely watching the case as they prepare to try to break open the transatlantic duopoly.
A WTO panel ruled last year that Boeing had received at least US$5.3 billion in subsidies through research contracts mainly from space agency NASA, as well as a series of tax breaks.
The findings followed a six-year probe into EU claims that Boeing had received more than four times that amount.
The EU filed the complaint as a counter-suit to US claims that Airbus had benefited from decades of European government loans, which the WTO trade body also deemed unfair.
People on both sides of the dispute, who asked not to be identified, said the Geneva trade court’s appellate body had upheld the bulk of the findings on the Boeing aid.
An advance copy of the ruling has been delivered to both sides, but the findings are being held under wraps until tomorrow.
“It won’t change much, but there may be some changes around the edges of the decision,” a US source said.
A European source called the ruling a victory for the EU. The Geneva-based WTO declined to comment.
The report is likely to be adopted by the WTO on March 22.
Even if it loses the appeal, the US is expected to claim victory over the pair of cases by highlighting what it describes as US$18 billion of European aid provided to Airbus, a figure disputed by the European side.
However, Airbus will try to keep the focus on the EU’s tit-for-tat case against the US and it expressed confidence about this part of the dispute on Friday.
“We don’t expect any change on fundamentals. It should not surprise us or Boeing. There is no way they can win this case,” a spokeswoman said.
A Boeing spokesman said it would not comment on the verdict ahead of the report’s publication.
The ruling is expected to run to hundreds of pages and, as with previous reports, give plenty of scope for both sides to choose specific details they can use to claim victory in public.
The next battleground will be over whether Airbus can tap more European government loans for its next A350 aircraft. That issue has also become mired in domestic politics as the jetmaker battles with Germany over allegations of political interference.
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