Has the European Union Commission become Airbus’ greatest ally in taking on Boeing? This appears to be the case in the next chapter of the eight-year-old conflict between the World Trade Organization (WTO) and the US-based commercial aircraft manufacturer. As Boeing has failed to address subsidies condemned in the March 2012 final WTO judgment, the EU Commission today filed a request for the WTO to grant US$12 billion in annual sanctions, which is “the largest WTO penalty ever requested, and it follows the worst loss a party has seen in the history of the WTO.”
Consequently, Airbus has issued a statement praising the EU Commission. “Airbus is grateful to the EU Commission for taking consequential action,” said Airbus spokesperson Maggie Bergsma, “However, this is nothing but the next step in a trade conflict that was launched in 2004 by Boeing. Boeing has been denying the decades of government support for years but was finally faced with a sweeping judgement in March. We regret that Boeing continues a legal battle that should have long been resolved by a mutual agreement. We made offers time and again but are ready to fight it through if the other side wishes to do so.”
In March 2012, Boeing had been given a six-month reprieve to implement the judgment, after the WTO had condemned state, local, and federal aid Boeing received in support of every one of Boeing’s current commercial aircraft programs. To be more specific, the WTO in March had called for the withdrawal of “at least US$5.3 billion” of federal subsidies already received by Boeing; elimination of an additional US$2 billion in illegal state and local subsidies due in the future under existing illegal schemes; and the termination of all US Department of Defense (DOD) and NASA research grants to Boeing, including funding, Boeing use of government facilities, and the illegal transfer of IP rights to Boeing
Airbus said: “In a filing with the WTO, it became clear that Boeing has failed to implement the judgment. With that failure, the case moves to its next phase: sanctions following confirmation that Boeing continues to distort the marketplace with taxpayer-funded subsidies.”
From Airbus’ perspective, “the EU’s requested US$12 billion annual penalty is justified by the WTO panel confirmation that the effect of the subsidies is significantly larger than their face value in light of their ‘particularly pervasive’ nature.” Simply put, the WTO is saying Boeing would not have been able to launch the 787 without illegal subsidies.
ETN contacted Boeing’s Seattle; Chicago; and Washington, DC media relations offices for a statement, but our calls have not been returned as of press time. This is to be expected, as Boeing has argued that WTO’s findings will have no relevant consequences for Boeing.
So, officially Boeing is really at war with Airbus. That much is clear. It should also be clear that while Airbus has the EU Commission and subsequently the WTO on its side, Boeing has the US government as its ally.
Who will prevail? So far, the Airbus team is earning major media mileage. How long will Boeing stay mum? We will find out soon enough.