Boeing and Airbus in spat over ‘illegal’ subsidies

Airplane maker Boeing
received billions of dollars in
questionable subsidies from
the US government, according
to a study by The World Trade
Organisation (WTO) which
was presented to officials
of the US and the European
Union (EU) on January 31.
But it still doesn’t negate
the fact that a parallel case
conducted by the WTO last
year also pointed a finger at
equally questionable loans
granted to the company’s
European rival, Airbus, by
the EU.
According to the US
publication, International
Business Times, the
latest report on Boeing is
confidential and will not be
published for several weeks or
months – nonetheless, Airbus
stated last week that the report
would reveal the scale of
illegal subsidies Boeing had
obtained.
In a shattering blow for
the US plane-making giant,
Airbus said that the WTO
report confirmed that Boeing
had received massive and
illegal government subsidies
for many decades.
And, added the European
aircraft manufacturer, the
WTO has also said that “they
have had a significant and
ongoing negative effect on
European industry”.
Also according to the
Airbus statement, the final
WTO report will say that
Boeing would not have been
able to launch the 787 without
illegal subsidies. Also that
Boeing has received the
equivalent of at least R35-
billion of US taxpayer dollars
which has been determined
illegal – and to point out that
an additional sum of more
than R14-bn in state and local
subsidies that Boeing will
receive in the future are illegal.
Said the Airbus release:
“The effect of the subsidies is
significantly larger than the
face value of the subsidies
in light of their particularly
pervasive nature.
“The pervasive subsidies
have thoroughly distorted
competition within the
aviation industry, directly
resulting in significant harm
to the European aerospace
industry.
“The effect of these
subsidies will continue in the
future, putting Airbus at a
significant disadvantage.”
In concluding that
Department of Defence
(DoD) and Nasa funding are
illegal subsidies, the release
added, the WTO decision
can be expected to require
fundamental changes to the
US funding mechanisms.
The WTO decision will also
confirm that Washington
State and the City of Everett
must stop subsidising
Boeing. Unless stopped,
these subsidies will increase
annually through 2024.
Airbus was also busy
making a case for its own
subsidy structure, and
suggested that the WTO report
could be expected to say
that the billions in subsidies
benefiting Boeing had a
significantly greater distortive
effect than the reimbursable
loans to Airbus.
Meantime, Airbus totted
up its own estimate of the
sales it has lost because of the
US government and regional
cash boosts that Boeing has
been enjoying.
It calculated that at least
R315-bn is a “realistic figure
based on identified lost sales”
to Airbus as a result of the
subsidies.
Airbus concluded that the
WTO would be seen “to have
now specifically green-lighted
the continued use of loans
in Europe and commanded
Boeing to end its illegal
research and development
(R&D) cash support from
Nasa, DoD and the US
taxpayers”.