Subsidies

Boeing Calls WTO Ruling a Landmark Decision and Sweeping Legal Victory

The World Trade Organization (WTO) announced on June 30, 2010 that billions of dollars in European launch aid subsidies used by Airbus to develop its commercial airplanes are illegal and must end. The decision also declares that an array of government funding for Airbus research and infrastructure development violated international trade agreements.

Boeing Executive Vice President and General Counsel J. Michael Luttig explained the details and implications of the ruling. “Each and every instance of launch aid that the U.S. challenged was held to be illegal,” said Luttig. “The panel said that without the illegal subsidies it received, Airbus would not have the aerospace market share it now enjoys. This ruling will alter the competitive landscape in the aerospace industry forever, forcing Airbus to compete in the marketplace on the same terms as Boeing.”

Airbus has used government-provided launch aid to fund the development of all its commercial airplanes since the entity was formed in 1970. It now commands more than half the commercial airplane market. Launch aid typically comes in the form of no- or low-interest loans with repayment terms so generous that no repayment need occur during the several years it takes to develop a commercial airplane, and not at all in the event a program fails. Launch aid is a unique benefit to Airbus, as the U.S. government does not fund development of commercial products.

More information, including excerpts from the decision, is available at www.boeing.com/wto.

Billions of dollars in illegal Airbus subsidies over the last two decades have eroded America’s aerospace industry and eliminated thousands of U.S. jobs.

Visit Boeing.com/wto

How the WTO ruling affects the Tanker Competition

The competitor for the U.S. Air Force tanker contract, Europe’s Airbus/EADS, is offering a tanker based on its A330 commercial airplane, the recipient of more than $5 billion in illegal subsidies from European governments. According to the WTO, these subsidies have caused severe damage to America’s aviation industry and now are distorting the tanker competition because the Department of Defense does not plan to consider illegal European subsidies in its decision.

Victory in Congress

With a recorded vote of 410-8, the U.S. House of Representatives on May 27 adopted a bipartisan amendment offered by Reps. Jay Inslee (D-Wash.), Rosa DeLauro (D-Conn.), Todd Tiahrt (R-Kan.), Rick Larsen (D-Wash.), Michael Turner (R-Ohio), and Russ Carnahan (D-Mo.) to the fiscal year 2011 National Defense Authorization Act to ensure a level playing field for the KC-X tanker competition. The amendment requires the Department of Defense to consider any unfair competitive advantage that European Aeronautic Defence and Space Co. (EADS) and its subsidiary Airbus have gained from decades of illegal subsidies. The World Trade Organization recently ruled that Airbus received billions of dollars in illegal launch aid from European governments, including almost $5 billion used to develop the A330, EADS’ tanker platform. The Senate is currently considering similar legislation.