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Latest update : 2010-03-23

The World Trade Organisation will issue a landmark ruling Tuesday on an epic six-year old clash between US and European aerospace giants Boeing and Airbus. The report is expected to confirm criticism of European financial aid to Airbus.

AFP - The World Trade Organisation is expected to issue a landmark ruling Tuesday on a six-year-old clash pitting US aerospace giant Boeing against its arch rival Airbus.

However, the 1,000-page decision on a complaint brought by the United States over European Union state aid for Airbus is only the first volume of the long-running, acrimonous saga.

Another ruling on a counter-complaint brought by the EU against US aid for Boeing is expected later this year, suggesting that the jury remains out on who might have won the overall dispute, analysts said.

"We can expect no answer for this commercial battle in the next few years," said analysts from French investment group CM-CIC Securities.

"In fact, the preliminary report of the WTO on the counter-complaint which was brought by the EU against the US is expected by June.

"It is possible that each party would file appeals, which could bring about a final ruling in 2013 at the earliest," said the analysts.

The outline of the ruling on the first US complaint was issued confidentially in September in the form of an interim ruling by the WTO panel.

However, like the upcoming decision, the report was transmitted only to the two parties involved and unusually little has filtered out in six months.

Washington and European capitals have kept the report tightly under wraps due to trade secrets contained in the lengthy ruling. EU and US officials have refused to divulge elements from the confidential ruling.

But ahead of Tuesday's ruling, both aerospace giants were claiming victory.

Airbus head of communications Rainer Ohler said that the WTO would reject "70 percent of the points raised by Boeing."

Meanwhile, Boeing's vice president for executive, legislative and regulatory affairs Ted Austell said the WTO would "uphold all of the major US claims."

The claims were reminiscent of those made after the interim ruling last September.

The difference in the reading of the interim report was borne out over European aid to Airbus's future A350 airliner.

Germany said Monday that it was ready to grant a 1.1 billion euro loan to develop the Airbus A350 long-haul passenger aircraft after preconditions were met, suggesting that the conditions were in line with WTO rules.

Boeing however slammed the move for flouting WTO legislation.

Austell said in a statement that Germany's planned move was one that "flies in the face of both the expected WTO decision and the rules-based global trading system we've all endorsed."

In the case filed in 2004, Washington charges that the EU illegally provides subsidies worth up to 200 billion dollars (139 billion euros) to Airbus.

It said an accord that allowed Brussels to provide up to a third of development costs of new airliners was no longer valid since Airbus is now a major industry player and not the fledgling firm it was when the deal was struck.

On the same day, the EU retaliated with a complaint against Washington's help to Boeing, accusing Washington of violating international trade rules by funnelling subsidies to civil aviation through military research funds.

Some 23 billion dollars of subsidies were masked as defence research, Brussels claimed.

If the damage to European aviation industry was calculated using the same figures as the US, it would amount to some 305 billion dollars, it added.


Date created : 2010-03-23


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