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12 March 2012
12. March 2012 Commercial Aircraft

Sweeping Loss for Boeing in WTO Appeal


Appeal Report confirms and extends the WTO’s condemnation of massive illegal subsidies to Boeing

Appellate Body rejects nearly 90% of US appeals of the WTO’s earlier findings while validating 100% of EU appeals

Loss of roughly $45 billion in Airbus sales due to illegal Boeing subsidies

Today’s Report from the World Trade Organization (WTO) Appellate Body (DS353) confirms and even extends previous WTO findings. The Report confirms the existence of illegal U.S. subsidies to Boeing – previously identified by the WTO as “at least $5.3 billion” and extended by billions of US dollars as a result of today’s decision – resulting in an estimated loss of approximately $45 billion in sales for Airbus. Despite earlier Boeing claims that only minimal actions to comply with WTO rules were necessary, it has become clear today that Boeing will have to make major changes to comply with this final WTO ruling. 
“The Appellate Body has now spoken in both the Airbus and Boeing cases,” said Rainer Ohler, Airbus’ Head of Public Affairs and Communications. “Comparing the core claims made by both sides, the net outcome is clear: 

Boeing’s cash grants are fundamentally illegal, while the system of loans to Airbus by European governments is legal and may continue. Boeing and the U.S. now will have six months to implement the WTO decision.” 
Moreover, today’s decision is a broad repudiation of the US’s arguments in this case – rejecting every single US appeal regarding the subsidies given to Boeing and nearly all of its appeals as to the competitive harm that those subsidies impose, while accepting every single EU point of appeal.
The WTO Appellate Body’s report highlights the scale of illegal support to Boeing funded by U.S. taxpayers.  The final decision confirms the facts already available from the previous Panel Report: 
• Boeing has already received “at least $5.3 billion” of U.S. taxpayer dollars, determined to be illegal.

• Boeing is set to receive at least an additional $2 billion in illegal state and local subsidies in the future under existing illegal schemes.

• The effect of the subsidies is significantly larger than their face value in light of their “particularly pervasive” nature.

• These pervasive subsidies have thoroughly distorted competition within the aviation industry, directly resulting in significant harm to the European aerospace industry.

• Boeing would not have been able to launch the 787 without illegal subsidies.
“Consequently, the B787 – previously known as the “Dreamliner” – is now to be called the “Subsidy-liner” (B7aid7). The WTO ruling proves it is the most highly subsidized aircraft in the history of aviation”, commented Rainer Ohler.

Furthermore, today’s report also expands on earlier WTO findings to reveal additional illegal and anti-competitive features of the support provided to Boeing. Specifically, the WTO Appellate Body agrees with the European Union that: 

• Every single one of the 23 U.S. Department of Defense (DOD) and all eight of the NASA research grant programmes are illegal subsidies.

• The U.S. Government’s many transfers to Boeing of intellectual property rights for technology developed at U.S. taxpayers’ expense were illegal subsidies.

• The WTO has now also embraced the EU appeal by determining that an additional approximately $500 million in state and local support from Kansas are also illegal subsidies that must be withdrawn. 
Airbus congratulates the European Commission and the Governments of France, Germany, the UK and Spain for their success at the WTO and is grateful for the years of effort they have invested in setting the record straight.
“Boeing and the U.S. only have six months to end decades of illegal corporate welfare for Boeing and fundamentally change the way the U.S. Government supports the commercial aerospace business: a disappointing outcome for those who launched this battle. Without compliance, massive sanctions will result – conclusively dispelling the U.S. and Boeing’s public smokescreen that the WTO’s findings will have no relevant consequences for Boeing,” Ohler concluded. 

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