US Could Impose $10 Billion Retaliatory Duties Against Airbus For Receiving $22bn In Subsidies

US is likely to impose $10 billion a year retaliatory duties against Airbus, following the World Trade Organization rule that the EU has failed to comply with its obligation to remedy the massive subsidies European governments have provided to Airbus for more than 40 years.

“The next step for the US is to obtain WTO authorization to impose billions in retaliatory duties. The US government has previously calculated those to be up to $10 billion annually,” a Boeing executive said commenting on the WTO ruling against Airbus subsidies which was announced yesterday.

The ruling confirms that Airbus both failed to withdraw old subsidies and instead put in place new subsidies for a grand total of almost $22 billion (principal amounts only). That includes $15 billion in launch aid for each Airbus commercial aircraft program from the A300 through the A380, and $2 billion in non-launch aid subsidies, a Boeing statement on the subject said.

The WTO rule also stated that for the first time that Airbus received illegal launch aid for the A350 XWB.  News reports put the total for that program at almost $5 billion. Echoing prior rulings, the WTO panel also found that Airbus and its current product line likely would not even exist without launch aid.

Rather than comply with their WTO obligations to remedy the $17 billion in past subsidies provided to Airbus, The WTO found that EU Member nations provided Airbus with new illegal launch aid almost $5 billion so they could launch the new A350. "It is apparent that the A350 XWB could not have been launched and brought to market in the absence of LA/MSF [Launch Aid]." WTO stated.

The WTO previously found that essentially no model of the entire Airbus fleet would exist today, including the A300, A310, A320, A330, A340 and A380, if subsidies were given legally by the European members.

 “Today the WTO went further and found that Airbus' existence continues to depend upon illegal, trade-distorting government subsidies in the form of launch aid, most recently for the A350 XWB – which reportedly totals almost $5 billion," said Boeing Executive Vice President and General Counsel J. Michael Luttig.