Preliminary WTO ruling reportedly faults Airbus
A preliminary ruling issued Friday by the World Trade Organization has found that European jet maker Airbus received billions of dollars in illegal subsidies, according to a report in The Wall Street Journal, citing a person familiar with the matter.
The U.S. Trade Representative’s office acknowledged receipt of the ruling Friday. "We are still reviewing the interim report, which is about 1,000 pages long," said USTR spokeswoman Deborah Mesloh.
The interim ruling, marking the beginning of the end for a five-year dispute between the United States and the European Commission, won’t be released publicly. Instead, the two parties will have time to study the decision and file comments before a final report later this year.
A second interim ruling related to European complaints that Boeing Co. also received subsidies is expected in six to nine months.
In that suit, the European Union complained that Boeing received subsides in the form of research and development funding from the U.S. Defense Department and NASA. Europe also claims the company enjoys "significant" federal tax breaks.
The two parties will have time to study the organization’s decision and file comments before a final report later this year.
Friday’s ruling answers U.S. charges that Airbus benefited from no-interest or low-interest loans from the Brisih, French, German and Spanish governments to launch new jets, including the A380 and the A350XWB. If a particular aircraft did not do well, the United States claims Airbus was under no obligation to repay the loan used auto loans.
Airbus is a unit of the European Aeronautic Defence & Space Co.
Boeing hopes a favorable ruling for the U.S. will force Airbus to find alternative funding, but it could also benefit the Chicago manufacturer in the bid to build the U.S. military’s next generation of aerial-refueling planes.
Northrop Grumman Corp. and its partner EADS have offered an Airbus A330 platform for the contract. In February 2008, the Air Force awarded the team with the contract, only to renege five months later after the Government Accountability Office backed Boeing complaints that the bidding process was shoddy.
Boeing has offered its 767-200ER to replace the Eisenhower-era Stratotankers currently in service.
Later that year, Defense Secretary Robert Gates postponed the contract until the next administration to allow a cooling-off period.
"As a legal matter, the tanker program won’t be affected at all," said Bob Novick, Boeing’s outside council. "But there is a law that directs the U.S. Air Force to consider whether the subsidies uncovered by the WTO impact the bidding."
Eventually, the Air Force will want to replace its total fleet of more than 500 tankers. That could add up to hundreds of billions of dollars in future revenue.