According to a press release issued by Boeing on Thursday 31 March 2011, the World Trade Organization (WTO) has ruled that European Union plane maker Airbus has enjoyed billions of euros in illegal government subsidies to fund its commercial airplane business over the last four decades.
The ruling was seen in the United States as vindication of a long held view that the EU has been engaged in unfair practices that have given Airbus an unfair advantage in the aviation marketplace.
“This WTO ruling shatters the convenient myth that European governments must illegally subsidize Airbus to counter U.S. government assistance to Boeing,” says Michael Luttig, Boeing executive vice president and general counsel.
“The ruling rejects 80% of the EU’s claims against the U.S., finding no more than US$2.7 billion of impermissible subsidies to Boeing not previously remedied. That amount includes $2.6 billion in NASA R&D funding, which is but a small fraction of the total amount challenged.”
U.S. Trade Representative Ron Kirk believes that the ruling supports the U.S. view that “the subsidies the Europeans give to Airbus dwarf anything that the U.S. government does for Boeing.”
But a quick search on the Internet reveals a totally different interpretation of the ruling on the other side of the Atlantic. Check out what British news agency Reuter has to say.
“Planemaker Boeing received at least US$5.3 billion of banned U.S. subsidies, the World Trade Organization said on Thursday in a dispute that shows no signs of an end to bitter transatlantic wrangling,” Reuter reports.
“The subsidies included support in the form of research and development payments to Boeing from the NASA space agency. The ruling by a panel of trade judges is the latest round in a six-year battle between the industry’s two giants that has spiraled into the world’s largest and costliest trade dispute.”
Airbus Press Release
Like Boeing, Airbus is putting a positive spin on the ruling. The European plane maker has also issued a press release on the matter, and it offers a completely different view than what was expressed in the press released issued by Boeing.
Are these two companies talking about the same ruling?
“Finally the truth emerges,” says Rainer Ohler, Airbus’ Head of Public Affairs and Communications.
“Boeing has received and continues to receive subsidies which have a significantly greater distortive effect than the Reimbursable Loans to Airbus. Taking the cases together, the WTO has now specifically green-lighted the continued use of government loans in Europe and ordered Boeing to end its illegal cash support from US taxpayers. It’s time for Boeing to stop denying or minimizing the massive illegal subsidies it gets.”
And this is what European Union trade chief Karel De Gucht has to say: “This WTO panel report clearly shows that Boeing has received huge subsidies in the past and continues to receive significant subsidies today.”
The jury is still out on who actually came out on top with this ruling. But it seems likely that both sides will appeal.
To Read the Full Report
Forget about what Boeing and Airbus have to say. Why not click on the following link to read the full report? But be forewarned: You will probably be even more confused than you are now!