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 According to the US publication, International Business Times, the latest report on Boeing is confidential and will not be published for several weeks or months – nonetheless, Airbus stated last week that the report would reveal the scale of illegal subsidies Boeing had obtained.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”.