Dec. 2, 2019, © Leeham News: Boeing and the US won another round at the World Trade Organization today when the compliance panel upheld a decision to impose tariffs on the European Union, including Airbus airplanes, in the 15-year trade dispute between the US and the EU.
The compliance panel did hand a minor win to Airbus and the EU by reducing the impact of “harm” to Boeing over the A380. Airbus argued that there should be no impact because the program is being terminated in 2021. In a partial victory, the WTO compliance panel agreed that the impact of the A380 is reduced with the decision to terminate the program in 2021.
But, according to a Reuters report, because the airplane continues to be delivered into 2021, the impact is not entirely eliminated.
Airbus declared partial victory, however. In a statement, the company wrote:
“A WTO panel assessing the measures the EU and Airbus have taken to comply with the WTO recommendations has issued its findings. As a result of the panel’s findings, the US should immediately reduce the $7.5bn in tariffs that the WTO authorized to the US in October by around $2bn. This is the direct result of the panel finding that the loans for the development of the A380 no longer have an impact on Boeing sales and that therefore the value of the lost sales no longer exists.”
The compliance panel, however, handed Airbus another defeat by affirming the A350 launch aid remains harmful and subject to some $5bn in tariffs. Airbus disagrees and so does the European Union.
“The panel also asserts that the amendments already made to the A350 loan agreements are not sufficient to fully align the loans with market conditions. Based on these findings, Airbus would support to appeal this report, as per WTO rules,” Airbus said in a statement.
An appeal needs to be filed by the EU and it needs to be done within the next nine days.
The US government has blocked appointment of members to the appellant panel.
In response to a query by LNA over the weekend, Airbus emailed the following statement, which preceded the news above:
The situation with the WTO Appellate Body is, indeed, very problematic. By blocking the nomination of Appellate Body judges, the US would effectively block the WTO dispute settlement mechanism.
How this affects our two cases:
After Dec. 11—a week from Wednesday—the three member Appellant panel won’t be able to accept new appeals, but it can continue to hear ones that were filed by then. This means the EU will have to file an immediate appeal of today’s compliance ruling. An appeal is expected.
On the WTO finding that Boeing and the US failed to cure illegal subsidies, the Arbitration panel’s decision on the amount involved is due next spring, likely in May or June. This decision can’t be appealed, but it can go to a Compliance panel which can review whether the US cured the subsidies.
Like today’s Compliance decision, next year’s compliant ruling may be appealed—provided the US allows new appointments to the appellant panel.