EU Declares Victory, Files Appeal in WTO Case against Boeing Subsidies

6 April 2011

Immediately after declaring victory in a WTO case against US aircraft subsidies to Boeing, the European Union wasted no time in filing an appeal to clarify certain points of law in the ruling.

Both sides have declared victory following the public release last Thursday of a WTO dispute panel ruling that tagged the US with some $5.3 billion in illegal subsidies. EU officials appealed in order to close a gap between the ruling and WTO jurisprudence in a mirroring case brought by the US against EU aid to Airbus, the flagship European aircraft manufacturer.

The EU is uneasy about the fact that its own case is running several months behind Washington's case against European aid to Airbus: a WTO panel ruling against Brussels' support to Airbus came out last June (the US appealed three weeks later). The difference means Europe could potentially be ordered to suspend aid to its aircraft maker - or face retaliatory sanctions - months before its US rival.   EU trade spokesman John Clancy made the point in a recent statement.  "The EU's victory in this case against Boeing remains very clear for all to see. However, the EU has chosen to quickly appeal technical elements of the ruling for legal strategic reasons-including to reduce what has been a growing time gap between the two parallel disputes," he said. Under WTO rules, both sides have 30 days to appeal, but only five days to respond once one side appeals.

The US, for its part, dismisses EU claims of victory, focusing on the discrepancy in the scale of illegal subsidisation: the earlier WTO ruling had found the EU guilty of providing with some $20 billion in illegal subsidies, as compared to $5.3 billion in illegal US support to Boeing.

"We believe the panel's findings challenged by the EU are correct and that the Appellate Body will affirm them," said Nefeterius McPherson, a spokesperson for the US trade representative's office. "The Europeans haven't gotten the message. Instead of prolonging the dispute at the WTO, they should be figuring out how to comply with the findings against them."

The US also argues that the decision recommends it correct only $2.7 billion in WTO inconsistent subsidies, once a support programme that has already been phased out is removed from the calculation.

"The WTO has vindicated the view that the US has taken for the last 20 years -- that the subsidies the Europeans give to Airbus dwarf anything that the US government does for Boeing," Ron Kirk, the US trade representative, said at a news conference in Washington.

Both the Airbus and Boeing cases, together, represent the biggest trade dispute to ever reach the steps of the WTO. They have garnered interest from third parties such as Brazil and China because of the potential impact the findings could have on countries developing their own aircraft industries.

ICTSD reporting: "US ‘vindicated' by WTO Boeing subsidies," ASSOCIATED PRESS, 1 April 2011; "US appeals Boeing ruling," WALL STREET JOURNAL, 1 April 2011; "EU files tactical appeal in Boeing trade spat," REUTERS, 1 April 2011; "United States trade representative Ron Kirk's statement on the WTO Boeing subsidy decision," OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE," 31 March 2011.

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