WTO Appellate Body Confirms Landmark Decision Against $18 Billion in European Subsidies to Airbus
In findings announced on May 18, 2011, the World Trade Organization (WTO) Appellate Body found in favor of the United States in the European Union’s appeal of a WTO Panel’s findings that launch aid and other subsidies provided by European countries to Airbus over the last four decades caused adverse effects to the interests of U.S. businesses and workers.
Here are key findings confirmed by the WTO Appellate Body:
Launch Aid – $15 billion
The Appellate Body confirmed the panel’s findings that European governments have provided Airbus approximately 15 billion dollars (face value) in launch aid – subsidizing every model of aircraft ever produced by Airbus in the last 40 years. This preferential financing permitted Airbus to introduce new models by offsetting the enormous costs and extremely high risks that characterize the development of large civil aircraft.
The Appellate Body confirmed the Panel’s findings that the launch aid enabled Airbus to launch and bring to market each of its models of aircraft when and as it did.
Other Subsidies – $3 billion
The Appellate Body confirmed that Germany and Spain provided massive infrastructure and infrastructure-related grants between 1989 and 2001, including the creation of land in Hamburg to allow Airbus to expand production facilities and extending an airport runway in Bremen.
The Appellate Body confirmed that France and Germany provided more than a billion dollars of equity infusions to Airbus between 1987 and 1998.
Adverse Effects for the U.S. Aircraft Industry
The Appellate Body confirmed that all of these subsidies caused adverse effects to the interests of the United States, in the form of significant market share losses for Boeing in the European Union and in other countries, including China and Korea. The Appellate Body also confirmed that the subsidies caused significant lost sales involving hundreds of aircraft to easyJet, Air Berlin, Czech Airlines, Air Asia, Iberia, South African Airways, Thai Airways International, Singapore Airlines, Emirates Airlines, and Qantas.
The Appellate Body confirmed the Panel’s findings that over a 40-year period the European launch aid enabled Airbus to launch and bring to market each of its models of aircraft when and as it did and that the subsidies resulted in Boeing’s lost market share and significant lost sales of Boeing aircraft.