Thursday, 24 May, 2018

Boeing, Airbus both find positives in WTO subsidy ruling

DEVELOPING NEWS: WTO rules EU failed to stop subsidies on some Airbus aircraft WTO Rules $22Bln EU Subsidies to Airbus Illegal, Authorizes US Retaliation
Preston Stone | 16 May, 2018, 05:29

The EU's trade commissioner Cecilia Malmstrom said the WTO had agreed that the EU had "largely complied" with its original findings, but that the EU would also "now take swift action to ensure it is fully in line with the WTO's final decision in this case".

The litigation adds to the tension between the U.S. and Europe, two once-cooperative trade partners that are already sparring over U.S. President Donald Trump's steel and aluminum tariffs and his decision to back out of a nuclear treaty with Iran, jeopardizing $40 billion in aircraft sales.

The latest WTO ruling on the decade-old case, which was initiated in 2006, ends the dispute and clears the way for the United States Trade Representative (USTR) to seek remedies in the form of tariffs against European exports to the United States, Boeing said. The bloc compounded the issue with below-market loans for the plane-maker's marquee A350 jetliner. Boeing claims that the EU provided the European aerospace giant more than $22 billion in illegal subsidies.

But the appellate body found a few compliance issues the European Union must address, including how loans to Airbus' wide-body programs - involving the redesign of the giant A380 and the company's answer to Boeing's 787 Dreamliner, the A350 - are repaid.

The WTP decision affirmed a ruling that France, Germany, Spain and the United Kingdom have failed to adequately remedy market-distorting aid for the launch of Airbus's A380 superjumbo, infrastructure support and equity investments that unfairly benefited the plane-maker.

$70 million Picasso damaged ahead of auction
A $70m Picasso self-portrait has been withdrawn from auction in NY after being "accidentally damaged ", Christie's said . Malaga-born Pablo Picasso's Le Marin (The Sailor ), painted in 1943, will not now be going under the hammer in NY today.

"Today's final ruling sends a clear message: Disregard for the rules and illegal subsidies is not tolerated", Boeing CEO Dennis Muilenburg, said in a statement.

The WTO report specifically says that the Airbus subsidies hurt Boeing through lost sales of large widebody jets to several major global airlines and in markets such as the European Union, Australia, China and the United Arab Emirates.

It is anticipated that US tariffs will be authorized up to the amount of annual harm the subsidies are determined to cause. The stock fell 0.9 percent to €96.25 at the close in Paris.

"The result is simple: Airbus pays back its loans, Boeing pays back nothing and continues to exploit the generosity of the USA taxpayer", he said. Boeing fell less than 1 percent to $342.09 at 12:37 p.m.in NY, recovering from losses logged before the decision was issued.

Deciding on a case first opened in 2004, the appellate body found Airbus paid a lower interest rate on financing to develop the A350XWB aircraft than it would have gotten in the open market.

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