Illegal Subsidies, Courtesy of the EU

[Evil_Maniac From Mars]

BBC

Spoiler Alert, click show to read: 

WTO 'rules EU plane aid illegal'

The World Trade Organization (WTO) has reportedly ruled that the European Union gave illegal subsidies to planemaker Airbus.

The Wall Street Journal and several news agencies reported the decision, which is officially confidential.

But Reuters reported that an EU source said it was "wrong and misleading" to describe the ruling as a US victory.

Both US and European diplomats have declined to release the ruling, which is over 1,000 pages long.

The trade dispute between the aircraft manufacturers, Boeing in the US and Airbus in Europe, is the biggest in the WTO's history.

The ruling comes after five years of deliberations. The decision is not expected to be officially made public for at least several months.

"The ruling is not a black-and-white case," an unnamed EU representative told Reuters.

"It simply is not a great victory for the United States."

The EU has also made a counter claim against the US for its support of Boeing. A ruling on the EU's claim against the US is due in the next six to eight months.

'Good case'

Experts say the WTO's decision will set the boundaries for acceptable government funding in civil aviation.

But Howard Wheeldon, senior strategist at BGC Partners, said there was still a long way to go in the saga.

"This whole WTO process is going to last four to five years. It's going to be 2013 at least before we get a final settlement on this," he said.

He added that Boeing and Airbus have to find terms so that they can work together based on what the WTO actually rules.

Louis Gallois, the chief executive of Airbus's parent company EADS, said before the decision that he believes the company has a "very good case".

Thoughts?

[Tribesman]

Thoughts?

Nothing really until the findings on identical US subsidies are done, and of course the rather strange case of the contract Airbus won being handed over to the losing bidder

[Crazed Rabbit]

About time. Course it'll be years before the US can even start retaliatory action.

CR

[Louis VI the Fat]

Thoughts?

- That I am dying to find out the content of this ruling! I can't wait until it's findings are released so we can review it, and see which, if any, subsidies are illegal.

- That if the verdict rules against the EU system of aircraft manufacturing subsidies, we shall have to overhaul our system and distribute the subsides in the same way that the US does.

[Crazed Rabbit]

- That if the verdict rules against the EU system of aircraft manufacturing subsidies, we shall have to overhaul our system and distribute the subsides in the same way that the US does.

Through defense contracts? Like the EU member countries already do? (IIRC)

CR

[Beskar]

I don't understand what is illegal here? I would like an explanation please.

I don't see how the EU giving money to Airbus is any different from like the money being given to GM motors by the US, or the billions given to the banking industry.

[Louis VI the Fat]

I don't understand what is illegal here? I would like an explanation please.

Legal or illegal here is decided by the agreements of the WTO. Whether they are fair or not is another issue. Both the EU and the US agreed to it, so these are the rules. Consider the WTO the referee.

Answering both your question and CR's above: the EU gives subsidies in the form of loans for development of airplanes. the US gives subisides for production of airplanes*. The former will - in all likelyhood - be deemed largely illegal by this WTO ruling. The latter remains to be seen. The EU's case against America is still pending.

What's fun, is that so much has changed since these cases were brought to court during the heyday of neo-liberalism. Aircraft subsidies are completely dwarved by subsidies paid out over the last year to the ailing automobile industry, both in the US and the EU. Which gives a surreal character to this whole row.

*To be exact, Rabbit's home state of Washington does.

[HoreTore]

May WTO burn.