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EU Claims Compliance With WTO Subsidy Ruling

by Ulrika Lomas, Tax-News.com, Brussels

14 December 2011


The European Commission has published a report detailing remedial actions taken to comply with a July 2011 ruling from the World Trade Organization, which found that European nations had provided subsidies to European aircraft manufacturer Airbus in contravention of world trade rules.

Announcing the report, spokesperson for the Commission on trade affairs, John Clancy said:

“Today we have presented a comprehensive package of actions that achieves full compliance with the WTO recommendations and rulings in the Airbus case.”

“Through this package we address all categories of subsidies, all forms of adverse effects, and all models of Airbus aircraft covered by the WTO rulings. What is now important is for everyone to realise that the United States will be in the same position as we are today after the WTO Appellate Body will rule on subsidies to Boeing early next year. At that point the EU expects to receive an equally solid set of compliance actions from the United States."

The European Union said in its compliance report, that it had "adopted a course of action that addresses all forms of adverse effects, all categories of subsidies, and all models of Airbus aircraft covered by the World Trade Organisation Dispute Settlement Body's recommendations and rulings".

The report stated that: “Specifically, in bringing its measures into conformity with its WTO obligations, the European Union has addressed all categories of subsidy covered by the DSB's recommendations and rulings: Member State Financing (MSF) loans, capital contributions, infrastructure support and regional aid."

The report added that, amongst other measures: "The European Union has secured repayment of MSF loans and terminated MSF agreements, increased fees and lease payments on infrastructure support to accord with market principles, and ensured that capital contributions and regional aid subsidies have, in the Appellate Body's words, 'come to an end' and are no longer capable of causing adverse effects,” the report stated.

The dispute looks set to rumble on however, after the United States government rejected the EU's claim that it has fully complied with the WTO ruling on aircraft subsidies, and US Trade Represtnative Ron Kirk has requested that the EU enter into consultations with the US on the issue.

“The WTO clearly found that every single grant of launch aid to Airbus, for every single aircraft that company produced, was a WTO-inconsistent subsidy that caused unfair adverse effects to US industry and jobs,” said Kirk.

“Our action underscores what we have said all along – that the United States cannot accept anything less than an end to this subsidized financing. The United States remains prepared to engage in any meaningful efforts, through formal consultations and otherwise, that will lead to the goal of ending subsidized financing at the earliest possible date," he concluded.

TAGS: business | law | aviation | World Trade Organisation (WTO) | trade disputes | United States | trade | European Union (EU) | Europe

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