WTO likely to rap Airbus aid but row to drag on

Defense News: GENEVA, March 23 (Reuters) - The World Trade Organisation is expected to confirm criticism of European aid for Airbus (EAD.PA) when it issues a final subsidy ruling on Tuesday, but this won't spell an end to the record transatlantic trade dispute.

Subsidy rules lie at the heart of the battle for dominance of the market for civilian aircraft which aerospace firms estimate will be worth $3 trillion over the next 20 years.

The United States argues that Airbus got a total of $205 billion in unfairly priced loans and other benefits from France, Germany, Spain and Britain over two decades -- making the case by far the biggest international trade dispute.

Even if the ruling condemns support by European governments for Airbus, the European Union will argue that a full picture will emerge only when the WTO rules on a countersuit brought by Brussels.

Final resolution of the two cases -- which may yet involve a negotiated settlement -- will define the rules of the civil aviation market, where Airbus and Boeing have together nearly $1 trillion of aircraft on their order books, for years to come.

A confidential interim ruling in September found European government payments to Airbus were "actionable" and backed some U.S. claims that they fell into the more severe category of illegal export aid, sources familiar with the findings said.

But trade judges were said to have rejected the idea that the findings would apply to future programmes, meaning trade tensions with Boeing (BA.N) could continue over the funding for Europe's next generation of airliner, the Airbus A350.

Barring a major upset, Tuesday's final ruling is expected to endorse the earlier report which triggered trade rhetoric on both sides of the Atlantic, trade diplomats said.

Boeing and Airbus clashed before the final report had even been published, saying it was likely to justify their claims.

Boeing seized on a German promise to provide similar funding for the A350 to the disputed system of government loans which triggered the original U.S. complaint to the Geneva-based WTO.

FLYING IN THE FACE

The move "flies in the face of both the expected WTO decision and the rules-based global trading system we've all endorsed", said Boeing's top legal executive Ted Austell.

Airbus spokeswoman Maggie Bergsma said the ruling would be "significantly disappointing for Boeing and largely different to what they are predicting".

The WTO panel's ruling, although final, is confidential to the parties in the case. Publication of the 1,000-page document must await translation and could take until the end of April or longer.

U.S. and European officials gave their interpretations of the report before publication, with Washington saying it would prove that Airbus had harmed U.S. workers and Europeans stressing it was only one part of a long process. In theory a WTO ruling could require the EU to desist from further aid within weeks. In practice both sides are certain to appeal both cases, stringing litigation out for months or years. (Reporting by Jonathan Lynn and Tim Hepher; editing by David Stamp)

WTO says Airbus subsidies hurt Boeing -US lawmaker

* Damage amount not yet assessed, U.S. senator says
* Ruling could influence decision on Pentagon contract
By Doug Palmer
WASHINGTON, Sept 11 (Reuters) - A World Trade Organization panel has found that European subsidies for Airbus (EAD.PA) injured its U.S. rival Boeing (BA.N), a U.S. senator said on Friday in remarks that clashed with a colleague's description of the ruling.
The high-stakes decision, not expected to be announced publicly for months, could influence whether Airbus parent EADS and its U.S. partner Northrop Grumman Corp (NOC.N) win a multibillion-dollar contract to build a tanker refueling fleet for the U.S. Air Force.
"They didn't assess a damage amount, as of yet. But they said there was a violation of the rules and there was harm that happened to Boeing because of this ... aid that was illegal," Senator Sam Brownback of Kansas told Reuters on Friday.
A damage estimate usually comes in later stages of WTO litigation and provides the basis for countries to impose retaliation if an offending practice is not reformed.
Brownback, whose state is home to Boeing military production, was responding to a letter sent by Senator Richard Shelby on Thursday to U.S. Trade Representative Ron Kirk. [ID:nN10405436]
Shelby said the WTO had ruled that a "launch aid" loan mechanism used by European governments to help Airbus develop aircraft was legal under global trade rules and that Boeing "was not materially injured by action taken by Airbus."
KANSAS VERSUS ALABAMA
He strongly criticized lawmakers like Brownback who say the WTO ruling is grounds for the Pentagon to decide against buying planes built by Airbus for a new fleet of mid-air refueling tankers.
But on that point, Brownback said he had no intention of backing down.
"Having watched Airbus illegally take market share from Boeing for years in the commercial field, I'm not about to stand by while they take U.S. military contracts with a subsidized aircraft," Brownback said.
Brownback said he expected the Defense Department to put out its request for proposals for the tanker program in the next month or two.
Shelby is from Alabama, where a tanker based on a modified Airbus A-330 would be assembled if Northrop and EADS win the projected $35 billion contract.
Kirk's office declined to comment on last week's decision but acknowledged receiving Shelby's letter.

"The most important thing right now is that the WTO completes its work on this issue," USTR spokeswoman Debbie Mesloh said.
U.S. private sector sources said the WTO found many launch aid loans Airbus got from European governments were on non-commercial terms, making them a subsidy under WTO rules.
European Union private-sector sources put the ruling in a more favorable light and insisted it will not affect European government plans to provide billions in launch aid to support Airbus' latest project, the A350 wide-body jet. (Reporting by Doug Palmer; Editing by Xavier Briand)

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.

UPDATE 2-U.S. expected to launch WTO case against China

* Both U.S. and EU expected to announce WTO case
* Case over China's export restrictions on raw materials
By Susan Cornwell
WASHINGTON, June 23 (Reuters) - U.S. Trade Representative Ron Kirk is expected to launch a WTO case against China on Tuesday when he holds what his office called a major news conference regarding U.S.-China trade.
Kirk's office gave no details in announcing the 9:15 a.m. EDT/1315 GMT session with reporters. But industry sources said they expected the United States and the European Union would both announce a World Trade Organization case against China over its export restrictions on raw materials.
The expected action by the United States and the EU follows their failure to persuade China to reduce its export tariffs and raise quotas on materials such as zinc, tin, tungsten and yellow phosphorous.
The first step, which industry sources expect to be announced on Tuesday, would be for Brussels and Washington to formally request consultations with Beijing. If these talks fail, the next step would be to request that a WTO panel hear the complaint, a step that can take years.
"If the U.S. and the EU do indeed file a WTO case against China on raw material export restrictions, we welcome this action," said Tom Gibson, president of the American Iron and Steel Institute.
"U.S. and NAFTA steel producers have long believed that this government of China policy is a WTO violation and that it is benefiting Chinese manufacturers artificially while disadvantaging manufacturers everywhere else," he said.
Western governments say resource-hungry China has continued to restrict exports of raw materials used in steel, semiconductors, aircraft and other products despite Beijing's pledge to eliminate taxes and charges on exports when it joined the WTO in 2001.
They say these quotas and taxes hurt European and U.S. companies while giving Chinese companies an unfair advantage. The export curbs drive down China's domestic raw materials costs at the expense of producers elsewhere in the world.
But taking action at the WTO is expected to further damage already brittle trade relations with China.
The materials expected to be covered by the case include yellow phosphorous, antimony, bauxite, coke, fluorspar, indium, magnesium carbonate, molybdenum, rare earths, silicon, talc, tin, tungsten and zinc.
In a move that may have been an attempt to forestall U.S. and European action, Beijing said on Monday it was cutting export taxes on a range of materials, including some used to make steel.
It said that effective from July 1, export taxes for indium and molybdenum would be cut to 5 percent from 15 percent and the 5 percent export tax on sulfuric acid would be scrapped. Taxes on some steel products and certain tungsten products will also be cut to 5 percent from 10 percent. (Editing by Chris Wilson)