WTO set to publish ruling on Boeing subsidies

GENEVA — The WTO is expected Thursday to partly uphold an EU complaint against decades of US state support for aircraft maker Boeing which it is claimed meant billions of dollars in lost sales for rival Airbus.

The ruling, a second key part in the bruising dispute between two of the world's biggest trading powers and their dominant aircraft makers, was released confidentially to US and EU authorities on January 31.

Neither of the state parties in the dispute have commented so far.

However, both Airbus and Boeing, who have been engaged in a tit-for-tat battle challenging their respective subsidies since 2004, have claimed victory.

Boeing acknowledged that some of the EU's claims that it received illicit US subsidies might be upheld when the World Trade Organization ruling is published on Thursday.

"We expect the WTO will confirm that just a fraction of the R&D (research and development) programmes challenged by the European Union benefited from impermissible subsidies that had not previously been brought into compliance with international rules," Boeing spokesman Charlie Miller said.

"The total is expected to be less than $3.0 billion," he added in a statement e-mailed to AFP on Wednesday.

Based on media reports, Miller said it was "clear that the WTO has rejected the vast majority of the EU's claims."

Airbus has claimed that the complex ruling vindicated its complaint that Boeing had received "massive and illegal" subsidies, sometimes in the form of defence or space contracts, that helped the company develop top-selling civil airliners such as the new 787 "Dreamliner".

The European aircraft maker, part of the European Aeronautics Defence and Space Company (EADS), estimated that illicit US subsidies amounted to at least $5 billion, causing $45 billion of lost sales between 2002 and 2006.

Boeing has said that the amounts paled in comparison with the illicit subsidies the WTO found last June that Airbus/EADS had received.

"Comparing the two decisions will reveal a market heavily distorted by illegal subsides to Airbus, which has enjoyed a huge market advantage for decades," Miller claimed.

A WTO ruling last June partially upheld Washington's complaint against the EU but both sides have already lodged appeals.

It accepted three out of seven claims by Washington that key launch aid amounted to export subsidies which are illegal under WTO rules, notably through loans at interest rates below the market rate.

Boeing said the 2010 ruling faulted $1.5 billion in European R&D subsidies, $1.7 billion in infrastructure subsidies, and $2.2 billion in equity injections, plus launch aid.

Experts believe both sides will eventually be found to be at fault to some degree, obliging them to restructure some state support and strike an agreement to end the dispute.

Boeing executives have suggested that the WTO rulings would also help draw a red line showing the maximum degree of state support that upcoming rival aircraft makers from emerging economies such as China or Brazil could enjoy.

Source: AFP