Subsidies No More

The World Trade Organization today ruled in favor of the U.S. legal challenge against alleged subsidies provided by the European Commission to Airbus. Experts and government officials have long expected that the EC would be faulted at least in part for various types of aid it has provided to Airbus and its predecessor companies since 1969.

Aerospace Industries Association President and CEO Marion Blakey had this to say about the ruling:

AIA welcomes the World Trade Organization ruling today as reported in the press that the European government’s launch aid to Airbus is not consistent with its rules. This is a positive action to help ensure the long-term health of the global aerospace enterprise. While preliminary, the ruling provides much-needed guidance to WTO members that are involved in or considering entering into civil aircraft production.

AIA has long supported the U.S. government’s efforts to resolve this matter through the WTO dispute resolution process. Today’s ruling is an important step toward achieving a level and fair playing field that will allow the U.S. aerospace industry to flourish in the international marketplace.

Airbus' parent company EADS has partnered with Northrop Grumman to compete for the Air Force's next-generation tanker competition. This week, Northrop said political issues should not be injected into the tanker contest.

Rep. Norm Dicks (D-WA), however, has no problem injecting a political issue into the dispute. In a just-released statement, Dicks says:

What is also clear now is that it would be inconceivable for the Defense Department to issue its "Request for Proposals" for a new Air Force refueling tanker without including a provision which recognizes the ruling issued today by the WTO panel: that these Airbus airframes have benefited from illegal subsidies that gave them an unfair advantage in global sales. The U.S. government cannot reward illegal market actions that have harmed U.S. manufacturers and stolen U.S. aerospace jobs. The tanker contract must be awarded on the basis of a level playing field, and because of today's ruling that means it must account for the direct and unlawful subsidies that have allowed Airbus to launch the A330 and other large civil aircraft without the risks that other manufacturers must assume.

For comprehensive coverage of the dispute, check out our sister Web site World Trade Online.