Airbus moves to settle 16-year battle with Boeing over illegal state aid
Airbus and the European Union say they have amended subsidies for the aircraft manufacturer that are the cause of an epic transatlantic trade row.
The pan-European plane-maker has agreed to changes to “repayable launch investment” (RLI) - a form of state support that was given to the company to help develop the A350 jet.
Airbus and Boeing have been fighting a 16-year battle at the World Trade Organisation (WTO) with parallel cases, each claiming the other received illegal state aid, whether in the form of RLI, loans, tax breaks of spin-offs from military contracts, while complying with the rules themselves.
Airbus said that by agreeing to raise interest rates it pays to France and Spain on RLI received for the A350, it comes into line with WTO rulings about the state support.
The row over subsidies spilled over beyond the WTO courts last year. The trade body authorised the US to impose tariffs on the import of $7.5bn European goods in retaliation for what it ruled was illegal support.
The US has imposed a 25pc levy on products including cheese and wine from the EU, along with tariffs of 15pc on Airbus airliners in a move that added an extra burden on American airlines buying Airbus planes.
Guillaume Faury, Airbus chief executive, said paying more for RLI showed his company “has left no stone unturned to find a way towards a solution”.
He added it came at a crucial time, with the aerospace industry having been hammered by the collapse in air travel caused coronavirus.
Mr Faury said: “This is a clear signal of support to those who are suffering from the severe impact of the tariffs imposed by the US, especially at a time when industries are hard hit by the consequences of the Covid-19 crisis.”
The EU said the new arrangement “removes any grounds for the US to maintain its countermeasures on EU exports and makes a strong case for a rapid settlement of the long-running dispute”.
Trade Commissioner Phil Hogan added: “Unjustified tariffs on European products are not acceptable and, arising from the compliance in the Airbus case, we insist that the US lifts these unjustified tariffs immediately.”
There are concerns that the long-running and bitter dispute could ultimately undermine Airbus and Boeing’s duopoly in the passenger jet market.
China is trying to establish itself as major player in the sector, with state support driving the effort.
With the two dominant aerospace players battling it out at the WTO, it would make it difficult to argue against aid from the Beijing regime for the country’s nascent aerospace industry - possibly on a scale the EU and US would be unable to match.
