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Business & Finance

Airbus makes gesture to resolve EU-US dispute

  • "Airbus considers itself in complete compliance with all WTO rulings," it said in a statement.
Published July 24, 2020

PARIS: Airbus announced Friday it had made a gesture to end a long-running dispute between the European Union and the United States at the World Trade Organization over aircraft subsidies.

The manufacturer said it had reached agreement with the French and Spanish governments that raises the interest rates on funds provided to help develop the long-haul A350 to levels the WTO considers appropriate.

"Airbus considers itself in complete compliance with all WTO rulings," it said in a statement.

"After 16 years of litigation at the World Trade Organization, this is the final step to stop the long-standing dispute and removes any justification for US tariffs."

An epic legal battle between Airbus and Boeing at the WTO began in 2004 when Washington accused Britain, France, Germany and Spain of providing illegal subsidies and grants to support the production of a range of Airbus products.

A year later, the EU alleged that Boeing had received $19.1 billion worth of prohibited subsidies from 1989 to 2006 from various branches of the US government.

The two cases were then tangled up in a legal quagmire, with each side being given partial vindication after a long series of appeals and counter appeals.

In June the US threatened to levy tariffs on another $3.1 billion in EU goods as it has been authorised to do under an WTO ruling.

Airbus said that the impact of those tariffs plus the coronavirus pandemic were the reason it was making the effort to resolve the dispute.

"The tariffs imposed by the United States Trade Representative (USTR) are currently harming all targeted industry sectors, including US airlines, and are adding to a very difficult environment as a consequence of the COVID-19 crisis," the firm said.

In 2019 the WTO authorised the US to impose up to 100 percent in taxes on $7.5 billion of European goods, its biggest ever penalty.

Washington then slapped 25 percent tariffs on a number of EU goods including wine, cheese and olives.

A 10 percent tariff on Airbus planes was increased to 15 percent in March, which also affects US airlines which buy Airbus aircraft, as the manufacturer points out.

The EU is waiting for the WTO to authorise it to impose sanctions against the US, with a decision expected in September or October, according to a source who asked not to be named.

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