WTO Rules Airbus Subsidies Illegal

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The World Trade Organization is now saying what Boeing and U.S. trade officials have been saying for decades: Airbus was illegally subsidized to develop new products that competed directly with Boeing products. "Today's final ruling puts any doubts to rest - launch aid is an illegal subsidy that has cost America jobs, hurt our ability to compete and damaged our overall economy," Sen. Patty Murray, D-Wash., said. The ruling went beyond determining the legality of start-up money. It said that Airbus would not have been able to overtake Boeing as the biggest aircraft maker in the world without the subsidies and that they cost U.S. jobs. Although the ruling seems unequivocal, what it means in practical terms is far less clear.

Airbus is appealing the decision and how long that appeal could drag on is not known. If, at the end of it all, the ruling sticks, the question of how to penalize Airbus will become the issue. Assuming Airbus continues to maintain its innocence, the only option left might be for the U.S. to impose trade sanctions on the company, which, until a week ago, was bidding to supply $30 billion worth of tankers for the U.S. Air Force. Boeing said the ruling might make other countries think twice about funding airliner development from the public purse. "Markets, not parliaments, should pick the winners in the global aerospace market," Boeing said in a statement.