Summary
The WTO rules on the European complaint against the US and Boeing over alleged subsidies and aid within the next six months – further handouts for the A350XWB means that Airbus risks the WTO voiding most of their key claims against the USA.
Analysis
With Airbus still soliciting for aid on the A350XWB program, reports are emerging that the Spanish Government may finally relent and throw several hundred million euros into the pot. This activity will almost certainly not be lost on the investigative team at the WTO.
In around six months time when the WTO rules on the Europe case against the US/Boeing, many observers are perhaps missing two crucial aspects of this trans-Atlantic tussle.
The first point is that the USTR Ron Kirk has threatened to lodge further complaints about Airbus’ aid on the A350XWB - the likelihood of this happening is all but a certainty. The second key point overlooked is that the US complaint against Airbus can be retrospectively applied to all Airbus products – the only area where Airbus has some credence to its claims of subsidies to Boeing pertain just to the 787.
Even those are mired in obscurity given the depth of partnerships with Japanese involvement and no tangible evidence that NASA research was deliberately siphoned off to develop the 787.
If Airbus and the European Union are expecting a similar sort of ruling that the US achieved, then this sort of brazen activity to importune direct state aid and distort airplane funding, then this is something that the WTO simply cannot ignore or turn a blind eye to.
There’s certainly nothing to suggest that Airbus or the EU will get the ruling they are adamant they hope they’ll get, but to engage in fundraising activity for which they have been universally condemned for just a few weeks ago speaks volumes about intent.
Perhaps this is pretext which EADS CEO Louis Gallois had hoped that direct talks would be able to start between both parties so that an amicable solution would be found – after all, Europe has far more to lose in a potential trade war with the United States than the other way around. One only need examine the recent spat between the USA and China over tire imports as a classic example of how two trading partners can still go toe-to-toe in the pursuit of equality and national interests.
With Airbus unlikely to step back from this precipice, the more and more likely it becomes that the upcoming second part of the WTO ruling will not deliver on what they seek. Such obfuscation is not going to yield the parity it seeks with Boeing, nor will it solve the underlying crisis behind how airplanes are funded and developed.
Rather, Airbus will still be staring down the barrel of having to pay back the illegal aid it has been an erstwhile beneficiary of and continue to see its US-rival fund its new projects in the same way it has done for the last half or more century.
Without the experience Boeing has of swallowing risk by financing projects with their own money and commercial loans, the notion of being a “victim” is quickly fading from Airbus’ persona and with it, the prospect of a ruling that seeks to draw a line under their claims against the US and Boeing – particularly as it gears to bid on a new USAF contract for aerial refuelling tankers whose recent WTO ruling against Airbus' illegal aid will no doubt be under the watchful eye of the USAF and members of Congress.
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
