http://news.yahoo.com/s/afp/20090904/bs_afp/wtotradedisputeaerospaceeu


WTO rules European subsidies to Airbus illegal: report



18 mins ago
BRUSSELS (AFP) The World Trade Organisation has judged European subsidies paid to Airbus illegal, the Wall Street Journal reported on Friday, citing a source "familiar with the matter".

But European sources who declined to be named told AFP that the interim ruling released by the WTO indicated that the US complaint was only partially upheld.

The Journal reported from Brussels that the WTO concluded that every launch-aid package given to Airbus for the development of its A380 double-decker long-range airliner was an illegal subsidy.

The conclusion was contained in a report of around 1,000 pages, with hard copies only going to EU governments and the US government, the business newspaper said on its website.

A European source confirmed to AFP in Brussels that "some elements" of the original US complaint to the WTO on the matter were upheld by the Geneva-based global trade body.

But, rebutting part of the Journal report, the source added that funds extended to Airbus as launch aid for the A380 "were not considered illegal in their totality".

Another European source, who spoke on condition of anonymity, said: "From our reading of this report 70 percent of the US claims have been rejected."

However, government grants were ruled illegal, he added.
"That'll have an impact for the next case," the source claimed.

Another WTO ruling is pending on the EU's tit-for-tat complaint against Washington over US state aid to Boeing, which is being dealt with by the Geneva-based trade body separately.

The WTO confirmed Friday it had issued the ruling on the acrimonious dispute to EU and US officials.

But it does not publish or comment on interim rulings, which are only issued to each side in the case on a confidential basis.
In the case brought against the EU in October 2004, Washington charged that it illegally provided subsidies to Airbus.

It said an accord that allowed Brussels to provide up to a third of development costs of new airliners was no longer valid since Airbus is now a major industry player and not the fledgling firm when the deal was struck.

While Airbus and Boeing are implicated in the case, the WTO only deals in cases brought by its member states and not individual companies.
The cases are some of the most complex to reach the international trade watchdog in Geneva.
Some analysts said a clear-cut judgment was unlikely given the complexity of the EU-US disputes over their flagship plane makers.

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That's an excellent news.
WTO, by explaining us that Airbus or Boeing can't fund themselves for building new planes will be the ultimate proof of the stupidity of their rules.

Step one Airbus found guilty of breaking WTO rules.
Step two Boeing found guilty of breaking WTO rules.
Step three US and Europe cut a deal to reduce max allowed subsidies to just under the max amount a year Boeing receaves.
Step four Airbus will only get 10-15% of A350 development costs instead of 33% in upfront loans from European goverments.
Step five US is happy Boeing is happy Europe is happy (that Airbus has been limited in the amount of money it can extort from European countrys)Airbus is not happy that they now have to fund 20% more of new aircraft development out there own pockets instead of the taxpayers but the extra cost wont do major harm to Airbus.