WTO to rule on claims Boeing received subsidies

PARIS/GENEVA Wed Mar 30, 2011 10:48am EDT

An Airbus A380 performs during a flying display at the 47th Paris Air Show at Le Bourget airport near Paris, June 21, 2007. REUTERS/Pascal Rossignol

An Airbus A380 performs during a flying display at the 47th Paris Air Show at Le Bourget airport near Paris, June 21, 2007.

Credit: Reuters/Pascal Rossignol

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PARIS/GENEVA (Reuters) - A long-running transatlantic trade dispute over illegal state handouts for Airbus EAD.PA and Boeing (BA.N) comes to a head on Thursday with the latest ruling from the World Trade Organisation.

The United States and European Union, both trading superpowers, have been fighting cases against each other in the WTO for more than six years over each other's subsidies for manufacturers of large passenger aircraft.

Thursday's document will contain the WTO's 1,000-page findings on European Union claims that U.S. planemaker Boeing won billions of dollars in unfair U.S. support.

The trade bloc brought the case after the United States protested against subsidies benefiting European planemaker Airbus. The WTO found parts of the financing for Airbus planes was illegal in its report on that case last year.

The two cases represent the world's largest trade dispute and could help determine how not only Airbus and Boeing, but potential future competitors in China, Russia, Brazil, Japan and Canada, run their growing aircraft sectors for years to come.

However, analysts say it could be months or even years before appeals and possible compliance procedures are exhausted.

DISAGREE STRONGLY

EADS subsidiary Airbus said the final report on the case against the United States over Boeing subsidies would damage its rival's past claims that it was market-funded. The EU says NASA, states and the Pentagon all pumped in funds unfairly.

"Boeing can no longer hide they received massive illegal subsidies that have severely harmed Airbus. Despite years of denial and attempts to minimize the research grants and state subsidies it receives, the public report will show the contrary," spokeswoman Maggie Bergsma said.

Boeing has acknowledged that the WTO backed some of the EU claims. However, the two sides disagree strongly over the amount of condemned Boeing subsidies and how they compared in size and effect with those given to Airbus.

"We are fully confident that the WTO will reveal tomorrow the massive market advantage Airbus has enjoyed from illegal government subsidies for more than 40 years," Boeing spokesman Charlie Miller said.

"From media reports quoting people who have seen the ruling, it is clear that the WTO has rejected the vast majority of the EU's claims in sharp contrast to last year's ruling that Airbus had received illegal subsidies totalling more than $20 billion."

After an interim confidential report was delivered to the parties in January, Airbus said it showed Boeing had received at least $5 billion in illegal subsidies and was only able to launch its 787 Dreamliner with such support.

Boeing denied the assertions and said Airbus had in any case received a much larger boost from taxpayers.

The two sides also disagree over whether the WTO's findings in the earlier case will automatically disqualify possible future government loans for the Airbus A350, an aircraft which is being developed to compete with the Dreamliner.

Both sides appealed aspects of the WTO's verdict on the original U.S. case and U.S. sources say the WTO's appeals body is expected to insist next month that Airbus remedy about $5 billion worth of illegal aid given in preferential public loans.

European sources say both cases should be considered together and say the best outcome would be political compromise.

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