WTO Airbus ruling due Tuesday

Update, March 24, 10:15PM Central European Time:

The reaction to the WTO Final Report at the Aircraft Finance Conference is a Big Yawn, even among Americans here in the Geneva, Switz, venue. As one person with close ties to Boeing put it, “Nobody cares.”

At a briefing we attended Tuesday night about the final report, we didn’t hear anything that meaningfully changed our commentary below.

Original Post:

The Final Report on the US complaint about illegal subsidies to Airbus is due tomorrow (March 23), but it will remain confidential until sometime in April before a public version is released for all to see.

Partisans on both sides of the dispute are already lining up in pre-issuing statements and, in the US case, an orchestrated media campaign touting how dastardly Airbus has been.

Yeah, well, whatever.

We’ve maintained all along that the practical effect of any WTO decision will be pretty much zilch. The Europeans will appeal the decision and, we predict, the appeal will be denied. The US might appeal elements of the decision for which it did not prevail and we think any appeal will likewise be denied.

Meanwhile, the European complaint against Boeing’s “illegal” subsidies will be decided and Boeing is likely to be found to have illegally benefited, too.

More time will pass, the US may appeal and it will be denied.

A political negotiation may or may not ensue.

In the meantime, Airbus will have a definitive path to follow for “launch aid” (or, as Airbus prefers, Reimbursable Launch Investment [RLI]) for the A350. So will China, Russia, Canada, Japan and Brazil for their airplane programs, some of which will compete with Airbus and Boeing. And Boeing will have clarity. Everybody will have clarity about what are legal subsidies. Airbus will have clarity for RLI for its successor airplane to the A320.

No sanctions will be imposed by the US on Airbus, nor by Europe on Boeing. No sanctions will be imposed on other products.

Life will go on. And the politicians will have to find something else to talk about.

7 Comments on “WTO Airbus ruling due Tuesday

  1. It will take some time for Americans to read what the actual report says, until such time they will go around making statements as usual about the subject without knowing what was written.

    The Boeing response today on the eve of the report being released is typical of what I expect.

    • Airbus’ claim of “victory” with regard to the WTO findings makes the Boeing statement look reasonable, no?

  2. There are reports that this process can still take years to appeal before any consequences are put in place.

    Sounds like a very slow moving process and by the time it is resolved there will no longer be a duopoly in that part of the industry producing smaller ( 100-150) seat planes. The world will change while they are examining the past.

  3. Airbus keeps pushing for a negoitiated settlement with the U.S. (and the U.S. only, by my understanding). I would understand such a negotiation would have no bearing on China, Japan, Brazil or Canada (nor any other potential airframe producing country) in any way. How would this play out in the future vis a vis complaints and counter complaints on all levels?

  4. The two major issues which could have been affected by a WTO finding are the US Tanker Contract and the future financing of the A350.

    The Pentagon says it will not consider the preliminary WTO report but the underlying politics of the contract may be affected nontheless.

    Europe has brazenly moved foward with governmental financing of the A350 despite these findings but can do so under the cover of the pending findings against Boeing.

    In truth, for the time being, the WTO is like some cloudy weather in the distance but there is no rain in the forecast and the wind is moving the clouds very slowly

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