International
WTO Finds Europe Gave Airbus Illegal Subsidies/h4>
The AP (6/30, Engeler) reported, "The World Trade Organization ruled Wednesday that European governments gave planemaker Airbus illegal subsidies in its battle with US competitor Boeing Co., in a first key ruling on a long-running dispute between the European Union and Washington." This was the public announcement of the ruling, which trade officials have known about for months. "The verdict confirms wrongdoing, but it was unclear how hard it came down against Europe as it awaits the result of a countersuit alleging illegal US support for The Boeing Co.," since the two together "could set important guidelines" over the next few decades. However, the EU and Airbus said there were parts of the ruling in its favor, and according to the AP, there are few that will completely understand everything in the report. "The WTO is expected to make a first, confidential ruling on US payments to Boeing sometime next month."
USA Today (7/1, Reed) publishes a series of questions and answers explaining how both sides are claiming they won, even though the WTO ruled in favor of Boeing. This is "largely because the ruling has no teeth. US Trade Representative Ron Kirk is demanding that Airbus repay $4 billion of what the WTO said was illegal subsidy for the Airbus A380 superjumbo jet. But the WTO has no enforcement power. The only US recourse is to levy punitive tariffs on European aircraft and other goods. But neither side wants a trade war." This dispute "dispute always has been about how Airbus will fund its next new aircraft, which will compete against Boeing's new 787 Dreamliner." Aircraft analyst Richard Aboulafia said, "if Europe wants to fund (the A350 XWB) they'll find a way to fund it, no matter what the WTO says."
The Wall Street Journal (7/1, B5, Miller, Michaels) reports the WTO condemned Europe in its main finding and may for Airbus parent EADS to pay back some of its subsidies, as Boeing on Wednesday said it should do. According to the article, the ruling is also coming into play in the Air Force's aerial tanker competition, as Boeing backers want the Pentagon to consider the subsidies in EADS' bid.
The New York Times (7/1, B3, Drew) also notes the ruling "immediately fueled concerns in Congress" about its affects on the Pentagon contract. Meanwhile, the ruling "said Airbus would have been a 'much weaker' company and probably could not have afforded to build the A380," while also affecting the development of the A310, A320, A330 and A340 models. "Boeing executives also hope that the political pressure created by the ruling will keep Europe from going ahead with similar loans to help Airbus develop the A350, which is meant to compete with Boeing's new 787 Dreamliner passenger jet."
McClatchy (7/1, Blumenthal), the Chicago Tribune (7/1, Johnsson), Bloomberg News (7/1, Ratnam, Rothman), the Orlando Sentinel (7/1, Burnett), and the Mobile (AL) Press-Register (7/1, Amy) also report the story.
