EU Announces Compliance with Airbus Subsidy Ruling

On Thursday 1 December, the EU submitted a report outlining the measures taken by its member states to comply with a 2011 ruling by the WTO’s Appellate Body that had deemed the EU’s subsidies to aircraft manufacturer Airbus illegal.

The compliance report is the latest move in a long-standing dispute between Washington and Brussels over airplane subsidies. The ‘twin case’ brought by the EU over the US’ subsidies to Airbus competitor Boeing is currently at the appeals stage

In May 2011, the Appellate Body ruling had called upon the EU to withdraw its subsidies or to remove their adverse effects within six months. Brussels had until Thursday to implement the Appellate Body’s rulings and recommendations.

The five-page document lists thirty-six measures of termination and amendments of agreements relating to the EU’s Airbus subsidies. The document further states that Brussels addresses “all models of Airbus covered by the WTO ruling.”

However, one EU expert commented to Reuters that this failed to include aid for the Airbus A350, as the original WTO panel had also excluded such measures from its ruling. Some trade observers have cautioned that this exclusion could open the EU to a challenge from Washington.

Washington limited its comments to a brief initial statement last Thursday acknowledging receipt of the report. “We have received the EU’s compliance notice today and will review it carefully before announcing our next step,” said US Trade Representative (USTR) Ron Kirk.

Meanwhile, representatives from the US aircraft industry were less guarded in their comments. Speaking prior to the submission of the compliance document, Boeing officials stressed that the EU was obligated to show that it has already taken steps to comply with the WTO ruling.

According to WTO rules on dispute settlement, Washington could indeed request the original panel to review the EU’s status of compliance and the possibility of countermeasures. But experts say that the key to resolving this seven-year battle would be for the two parties to sit at a table and negotiate.

A separate panel ruled in March that the US had been providing illegal subsidies to aircraft manufacturer Boeing. Both sides appealed that judgment.

“What is now important is for everyone to realise that the United States will be in the same position as we are today after the WTO Appellate Body will rule on subsidies to Boeing next year. At that point the EU expects to receive an equally solid set of compliance actions from the United States,” Clancy added in his statement.

The Appellate Body is expected to circulate its report on the Boeing case at the beginning of next year.