Trade ministers ready to study WTO Airbus ruling

Enlarge Photo
(Reuters)

By Laura MacInnis and Jonathan Lynn

GENEVA/NEW DELHI (Reuters) - Top officials from the United States, European Union and Brazil on Friday awaited a pivotal World Trade Organization ruling on subsidies to Airbus that stands to impact the global aircraft sector.

The confidential WTO verdict is due to be issued to U.S. and European diplomats in Geneva around 1400 GMT, and will soon thereafter be reviewed by government and industry leaders in Brussels, Washington and around the world.

Ministers meeting in India to advance negotiations on a new global free trade pact, the Doha round, will be presented with a report which may run to 1,000 pages or more.

"It is important to the European Union, it is important to the U.S. We will wait and see what happens with the ruling," said EU Trade Commissioner Catherine Ashton.

The three-member WTO dispute settlement panel is expected to agree with complainant Washington that the billions of euros of "launch aid" Airbus received to build the A380 and other top-selling planes was anti-competitive and broke trade laws.

Such a finding could limit Airbus' options to finance new airliners, such as the wide-body A350 due in the next decade, and also affect how industry rivals in Brazil, Canada, China, Russia and Japan fuel their expansion.

"Of course we will be very interested because it may affect the way others operate," said Brazilian Foreign Minister Celso Amorim, who flew to New Delhi on an Embraer jet. Embraer and its Canadian rival Bombardier were also embroiled in years of WTO litigation over aircraft subsidies.

NEGOTIATION

The Airbus case, and a counter-claim by Brussels about support to Boeing , whose findings are expected in six months, represent the biggest and most commercially significant dispute in WTO history.

Boeing claims Airbus got a cumulative boost of $205 billion from advantageous loans and other perks from France, Germany, Spain and Britain over two decades, giving it an unfair edge.

Airbus says the loans were fair and claims in turn that Boeing got illegal subsidies from U.S. agencies including NASA plus big tax breaks from several states, worth some $24 billion.

U.S. Trade Representative Ron Kirk, speaking in New Delhi, said he hoped the long-awaited WTO verdict should prompt changes in the way Airbus operates.

"We continue to believe, and it is a fairly straightforward reading of the statutes, that the extraordinary amount of launch aid that France, Germany -- some members of the EU -- have provided is not permissible in an open, competitive economy," he told Reuters.

Friday's Airbus report will not be made public for several months to give both sides the chance to review it. WTO panels virtually never change the substance of their preliminary rulings before they are made public as final versions.

Years could pass before the WTO arbitration process runs its full course and most industry analysts expect the Boeing-Airbus fight to be settled through negotiation before the cases are appealed to the Appellate Body, the WTO's top court.

But the extent to which Airbus or Boeing comes out cleaner than the other in the twin preliminary rulings will affect the dynamics of those settlement talks, which both sides have said they eventually want to hold.