• Airbus-Boeing Dispute Highlights
  • July 7, 2011 | Authors: John B. Brew; Carrie F. Fletcher; Michael Koebele; Laurent Ruessmann; Alexander H. Schaefer
  • Law Firms: Crowell & Moring LLP - Washington Office ; Crowell & Moring LLP - Brussels Office ; Crowell & Moring LLP - Washington Office ; Crowell & Moring LLP - Brussels Office ; Crowell & Moring LLP - Washington Office
  • The World Trade Organization's ("WTO's") Dispute Settlement Body ("DSB") adopted the Panel and Appellate Body ("AB") Reports in the European Communities and Certain Member States - Measures Affecting Trade in Large Civil Aircraft ("Airbus") brought by the United States. The AB found the European Union ("EU) and its member states had provided subsidies to Airbus that had caused serious prejudice to the US. The AB refused to quantify the alleged subsidies at issue; the U.S. has alleged they amount to more than $18 billion while the EU has argued most of those subsidies have expired. In either case, the EU now has 6 months from the adoption of the AB report to withdraw the subsidies or to remove their adverse effects.

    In its lengthy 1200 page report, the AB reached a number of conclusions with potentially important consequences on both the ongoing Boeing dispute and more generally on the future analysis of government subsidies. In particular the AB broke new ground in finding: (1) that the correct test for analyzing the export-contingency of government subsidies is 'objective', requiring an analysis of the design and structure of the subsidy and not the government's motivation for implementing it; (2) that partial privatizations may be sufficient to 'extinguish' subsidies despite established precedent which had only permitted extinction under a 100 percent privatization; and (3) that R&D programs that are not directly targeted at specific products need to be carefully analyzed as they may not be causally related to any prejudice the petitioner experienced.

    It will be interesting to see how these findings carry over into the AB's review of the EU's symmetrical WTO suit against alleged U.S. subsidies provided to Boeing. Both the U.S. and the EU are currently appealing the Boeing Panel's report from the end of March in which it found various U.S. subsidies to Boeing to be prohibited.