Market Overview

WTO Validates US Tariffs In EU, Airbus Case

WTO Validates US Tariffs In EU, Airbus Case

The World Trade Organization has determined that the European Union continues to subsidize the Airbus A350, according to a Monday Reuters report.

The finding concludes a second compliance procedure related to EU support for the plane manufacturer. 

The WTO issued a panel report on the matter Monday. 

Boeing, Airbus Subsidy Battle Continues 

Previously issued government loans continue to buoy the Airbus A350 and the Airbus A380, the WTO found.

It's causing less harm than expected to U.S. rival Boeing Co (NYSE: BA), but will hamper Boeing’s market share until Airbus ends production in 2021, the organization said. 

The findings extend a 15-year dispute between Boeing and Airbus in which each party alleges the other received billions in government subsidies.

The WTO ruled in October that the EU violated subsidy rules in its relationship with Airbus and authorized the U.S. to impose tariffs on various EU goods to offset Boeing’s competitive disadvantage.

At the request of the EU, the trade organization permitted presentation of new arguments demonstrating EU compliance.

Decision Could Lead To Lower US Tariff Cap 

Following the October decision, the U.S. enacted tariffs covering Airbus planes and various consumer goods, including whisky, cheese and olives.

The recent findings may inspire the WTO to reduce the U.S. tariff cap, calculated to reflect damage to Boeing, from $7.5 billion to $5.5 billion, according to Reuters.

Experts expect the $7.5-billion cap to remain in place as the WTO works through an appeals process and related legal issues.

What’s Next

The EU is awaiting a ruling on its case against the U.S. related to Boeing subsidies. A decision is expected in the spring.

Boeing shares were down 1.44% at $360.90 at the time of publication. 

Related Links:

American Airlines To Resume Boeing 737 MAX Service In January

EC Investigating Boeing-Embraer Joint Venture

Photo by Julian Herzog via Wikimedia

Posted-In: Airbus EU European Union ReutersNews Eurozone Markets Media Best of Benzinga


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