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Airbus Concedes to End 16-Year Old WTO Dispute

By Alicia Arizpe | Fri, 07/24/2020 - 11:27

French planemaker Airbus announced on Friday that it would agree to higher interest rates on the loans it received from French and Spanish governments for the development of the A350. This move is expected to be a step forward in the resolution of a 16-year old trade dispute between the EU and the US. 

The decades-old rivalry between Airbus and Boeing was instrumental in a trade war that dates back to 2004, when the US accused Airbus of receiving unfair subsidies from the EU. The EU, in turn, pointed to subsides Boeing received from the US government, forcing the World Trade Organization (WTO) to launch separate investigations on both matters the following year. The WTO ruled that some of EU’s loans to Airbus were unfair but a different WTO panel backed the EU’s claim against the subsidies Boeing received from the US government and NASA. During the following decade, both sides would claim to be following WTO rules while accusing the other of failing to do so. Eventually, in 2019, the WTO allowed the US to impose multimillion-dollar tariffs on several EU products including olive oil, cheese, wine, pork meat and many others and a 10 percent tariff on Airbus jets. In early 2020, the US announced it would consider further 10 and 25 percent tariffs on EU imports. However, the EU is expected to receive authorization from the WTO to impose its own tariffs on US products later this year as Boeing’s subsidies were also found to be unfair.

Amid the trade dispute, both OEMs were pressured by their respective governments to find a solution. Airbus’ decision announced this Friday includes amendments to the loans it received from France and Spain for the construction of the A350, which the company expects to be “the final step to stop the long-standing dispute and remove any justification for US tariffs.” The French planemaker explains that it took this decision considering the heavy burden tariffs place on several industry sectors, which are already being heavily impacted by the COVID-19 outbreak. “We have fully complied with all the WTO requirements. These additional amendments to the A350 RLIs demonstrate that Airbus has left no stone unturned to find a way toward a solution. This is a clear signal of support to those who are suffering from the severe impact of the tariffs imposed by the USTR, especially at a time when industries are hard hit by the consequences of the COVID-19 crisis,” said Guillaume Faury, CEO of Airbus.

 

Alicia Arizpe Alicia Arizpe Senior Writer