Boeing found harmed by Airbus aid, exposing European Union to U.S. sanctions

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The US threatened to impose sanctions against the European Union after the World Trade Organisation ruled that Airbus had received illegal government funding to develop jetliners, costing Boeing sales.

The EU will now take "swift action to ensure it is fully in line with the WTO's final decision in this case", she said.

According to the European Commission (EC), the WTO has determined "the majority of EU support to Airbus challenged by the USA had expired in 2011" and the EU is not required to take any further action regarding state support for the A300, A310, A320 and A330/A340 aircraft models. The company added that it plans to eliminate the subsidies that the WTO ruled were unfair.

The authorized tariffs are likely to total billions in duties per year, unless and until Airbus addresses the illegal subsidies it received from European governments for its most recently launched airplanes. For a claim to stick at the WTO, subsidies must be found not just to exist but to have caused real harm. Tariffs could be scheduled as early as 2019.

"The WTO has now dismissed in their entirety 94% of Boeing's original claims", Airbus said in a statement.

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"Today's final ruling sends a clear message: disregard for the rules and illegal subsidies are not tolerated", Boeing said.

The WTO ruling did reverse parts of a 2016 decision, finding no fault in the development of the A320 and A330 jets.

But the WTO still has to make a final ruling on separate allegations from the European Union that Boeing was provided illegal subsidies from the USA government. It is under appeal and should be decided within the next year. In the coming months, WTO's appelate court is set to rule on Airbus's counter-claim that Boeing received more than $20 billion in illegal aid under tax breaks granted by Washington state. In a statement, he also noted that Boeing would find it hard to prove before the arbitration panel any significant damage from the subsidies granted to Airbus.

Boeing shares were down 0.7% at 342.22 on the stock market today.

"Today's report is really only half the story", Airbus Chief Executive Tom Enders said.

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The next stage of the 14-year battle decided on Tuesday will be over the size of the tariffs the USA will be allowed to impose to compensate for lost exports.

But the organization also overturned a previous ruling that found the subsidies were hurting sales of the single-aisle 737, Boeing's most popular plane. This is proof of Boeing's cynical PR motives in bringing this case about in the first place.

The move means that the USA, under WTO rules, can ask an arbitrator to determine the level of retaliation it can seek against the European bloc as a result of its failure to comply. Without that, the additional loan repayment penalties, potential tariffs and public perception scorecard will put the European company at a significant disadvantage in its stated goal of dethroning the American company as the world's top aerospace company.

This finding closes a long chapter on Boeing claims against Airbus, but Airbus is pinning its hopes on a ruling against Airbus in its final claim.

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