US to Reopen WTO Case Against EU Over Airbus Subsidies

Strategic Insights -

The United States has indicated it will reopen a World Trade Organisation case against the European Union over "illegal" subsidies for Airbus, a move that has the potential to create transatlantic tension and threaten trade liberalisation talks. The decision comes after talks with the EU failed to reach an agreement to end aid for both Airbus and Boeing. US Deputy Secretary of State Bob Zoellick accused unnamed EU countries of refusing to support a settlement before the April 11 deadline, sparking the US decision to pursue a legal case.

Key Takeaways:

  • The US will reopen a WTO case against the EU over Airbus subsidies, citing "illegal" aid.
  • The deadline for reaching an agreement outside the WTO was next Monday, but talks with the EU failed to produce a settlement.
  • US Deputy Secretary of State Bob Zoellick accused unnamed EU countries of refusing to support a settlement.
  • The EU will mount an immediate counter-case, citing the US's withdrawal from a 1992 agreement to limit aid to the aircraft industry.
  • Airbus may seek government launch aid worth up to a third of the estimated €4bn-€5bn cost of launching the A350.
  • The parent boards of Airbus (EADS and BAE Systems) will decide this summer whether to apply for aid.

Statistics:

  • Estimated cost of launching the A350: €4bn-€5bn
  • Boeing's alleged unlawful aid: $27bn
  • Boeing's alleged unlawful tax loopholes: $200m per year
  • Boeing's alleged 787 launch aid from Japan: $1.6bn
  • Airbus's alleged launch aid: $15bn

Sources:

  • Washington Post (cited in the article)
  • EU trade commissioner Peter Mandelson
  • US Deputy Secretary of State Bob Zoellick
  • Industry sources ( anonymity maintained)