While we were gone, the WTO issued its ruling on the Airbus case, which was appealed by both sides.
There’s been plenty post-ruling analyses written already, and since we’re nearly a week later, we’re not going to add much to it except to point you to Aspire Aviation’s analysis and say this: Both sides won some and both sides lost some in this case. The USTR failed to achieve its top goal, and that is to have the WTO rule launch aid illegal, so blocking aid to Airbus to make the A350 XWB was a failure.
This is a major defeat for the US–and for Boeing.
Boeing and the US had three major goals: get launch aid declared illegal; get the A380 launch aid declared prohibited subsidies; and block A350 launch aid. The rest was icing on the cake.
Well, the icing got made but the cake collapsed in the over.
The WTO quickly ruled that A350 launch aid wasn’t part of this case. Then the panel found that launch aid, per se, wasn’t illegal, just the implementation of it had been. And finally, the WTO appeals board reversed the initial finding of the WTO panel that subsidies for the A380 were prohibited, also a defeat for the US.
But the US did win on several “actionable” subsidy claims. And the US and Boeing did get a win in that while launch aid itself is not illegal, the preferential interest rates are and now Airbus has to draw any future aid on commercial terms, which is a defeat for the EU and for Airbus.
This begs the question of why Airbus needs launch aid in the future if it doesn’t get the money on preferential terms but is required to get it on commercial terms. The answer, to us, is that it doesn’t, except that this is a “capital market” available to Airbus that is not available to Boeing. You can argue about the fairness of this (and, as our readers know, we don’t like “corporate welfare” in any form), but at least the money is now supposed to be at market rates.
Airbus crows that it won 90% of the WTO case against it. We remember Northrop Grumman and Airbus parent EADS crowing similarly that it won 100 of 108 complaint items against the appeal of the tanker contract. It doesn’t matter how many were won; in that case, eight were lost and look who has the tanker contract now.
Airbus (the EU) won important points at the WTO, with launch aid being the big one, but the Airbus press release was hyperbolic at best. So was the US/Boeing side.
The appeal of the case against Boeing is pending, and like this one, we expect both sides to win and lose. The case will, as Aspire Aviation notes, drag on.