WTO raps European export aid for Airbus: sources

PARIS September 7, 2009 (Reuters) - The WTO has found that loans from European governments to Airbus were not only unfair subsidies but in some cases violated a tougher ban on export aid, according to sources familiar with a report that also rejected some U.S. complaints. The findings are contained in a confidential interim report distributed by the World Trade Organization to the parties in a row between the United States and European Union over aircraft subsidies that could affect planemakers worldwide.
U.S. lawmakers briefed on the report said on Friday that the WTO had ruled against European government loans for Airbus, backing claims that they harmed Boeing. European sources denied there had been a clear-cut result.
Picking apart the contrasting claims, two sources familiar with the case told Reuters the draft conclusions of a five-year WTO probe overwhelmingly backed U.S. charges that the dozen or so loans were "actionable" subsidies that harmed Boeing.
Washington won a partial victory on a second key claim: that most of the same loans further violated WTO rules by amounting to prohibited export subsidies, the sources said. The extent of the U.S. victory on this point remained unclear.
SUPERJUMBO
Under trade rules, "prohibited" subsidies must be dismantled or amended swiftly after the conclusion of a case without the complainant needing to prove its firms were harmed. "Actionable" subsidies are seen as harder to attack and remedies are slower.
At least one of four loans given by European governments to help fund the A380 superjumbo was cleared of being a banned export subsidy, but the rest were found illegal, sources said.
Washington however lost a third claim: that the overall use of European loans was an invalid program of support in its own right, several sources familiar with the matter said.
The United States had not only attacked the individual loans but claimed they were part of a concerted and open-ended system in a bid to implicate future loans for Airbus's future A350, which fell outside the jurisdiction of the WTO complaint.
Washington is expected to protest those loans separately.
The United States broadly won its case against European Union research and development funding for Airbus, as well as infrastructure projects that Washington regards as a covert boost for the European planemaker, two of the sources said.
R&D spending and infrastructure projects in the United States are also at the center of an EU counter-claim against the United States. The process is about six months behind the U.S. case against Airbus, though the two are not officially linked.
The United States lost its case against loans by the European Investment Bank awarded to Airbus, the sources said.
None of the sources agreed to be identified because no one is authorized to speak publicly about the WTO findings ahead of their publication in several months.
The United States and European Union said on Friday they would not comment on the findings in the 1,000-plus page report, which was passed to them for comments ahead of a final ruling.
Airbus and Boeing declined comment. The European Investment Bank was unavailable for comment.