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Boeing, Airbus both find positives in WTO subsidy ruling

Boeing, Airbus both find positives in WTO subsidy ruling

As Donald Trump threatens European companies with sanctions following his withdrawal from the United Nations framework agreement with Iran on its nuclear programme, the World Trade Organisation Appellate Body has concluded that Boeing's complaint of illegal subsidies to Airbus by some European governments is largely unproven under its rules.

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.

"This report confirms once and for all that the European Union has long ignored WTO rules, and even worse, European Union aircraft subsidies have cost American aerospace companies tens of billions of dollars in lost revenue", said U.S. Trade Representative Robert LighthizerRobert (Bob) Emmet LighthizerMcConnell urges GOP senators to call Trump about tariffs Companies brace for trade war MORE.

The United States brought the case to the WTO in 2004.

Shares of Airbus reversed earlier gains to trade down as much as 1.8 percent immediately after the ruling was published.

The WTO report coincides with mounting trade tensions over US aluminium and steel tariffs and the impact on European firms of Washington's decision to exit the Iran nuclear pact.

The Geneva watchdog, however, had dismissed USA claims that the loans for the most popular models of Airbus, the A320 and A330, were costing aignisignif sales to Boeing.

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Calling it "the largest-ever WTO authorisation of retaliatory tariffs", Boeing predicted that the USA government could impose tariffs worth billions of dollars on European Union imports.

Boeing says Airbus received illegal aid worth $22 billion, including $18 billion in loans from governments.

The CEO of Airbus, Tom Enders said, "Today's report is really only half the story". For a claim to stick at the WTO, subsidies must be found not just to exist but to have caused real harm.

It said in a statement that, "This is expected to be the largest-ever WTO authorization of retaliatory tariffs".

It is expected that USA tariffs will be authorized up to the amount of annual harm.

"Unless the European Union finally takes action to stop breaking the rules and harming US interests, the United States will have to move forward with countermeasures on European Union products", Lighthizer said. It has meanwhile levelled significant subsidy claims against Boeing. "Also, we look forward to the upcoming ruling by the Appellate Body on United States compliance with the WTO findings of the massive and persistent government support to Boeing", she added.

Airbus says Boeing's willingness to deliver the last rites to the A380 contradicts Boeing's claim that it has been damaged by the same aircraft.