WTO Dispute Settlement: US, EU Debate Compliance in WTO Airbus Case (excerpt)
(Source: Int’l Centre for Trade and Sustainable Development; posted May 18, 2017)
Earlier this month, delegates from the US and EU gathered at WTO headquarters for hearings in the long-running case concerning government support provided by the 28-nation bloc to European aerospace giant Airbus (DS316). The Appellate Body made part of the debate available for public observation last week.

The multi-billion euro dispute dates back to 2004, when the US requested WTO consultations with the EU. The US cited concerns at the time that the bloc and four EU member states had provided financial support for Airbus to develop and produce large civil aircraft in a manner that violated global trade rules.

One year later, Brussels brought its own challenge against Washington’s support to Boeing, which at the time was the other major player in the aircraft manufacturing sector (DS353). The two cases, together with a newer dispute (DS487) concerning tax incentives provided by the state of Washington to Boeing, have become among the most high-profile at the global trade arbiter, given their commercial significance.

The years of litigation have also prompted calls from industry players – including the head of Airbus – for negotiating some type of solution that would end the litigation, including global rules on aircraft subsidies. (See Bridges Weekly, 1 December 2016)

After years of legal proceedings, the Appellate Body found violations of the WTO’s subsidy rules in both cases. In late 2011, the EU said that it had brought its support for Airbus in line with WTO rules, while the US disagreed and asked a panel to examine this compliance issue.

A compliance panel found in September 2016 that the EU needed to do more to resolve the trade rule violations. That finding later saw appeals from both parties.

Appropriate steps taken?

The WTO’s Agreement on Subsidies and Countervailing Measures (SCM Agreement) defines the government support measures that qualify as subsidies, along with outlining what actions members can take in response. Furthermore, it says that in cases where WTO judges have found that one member’s subsidies are having “adverse effects” on another member’s interests, the former “shall take appropriate steps to remove the adverse effects or shall withdraw the subsidy.” (end of excerpt)


Click here for the full story, on the ICTSD website.

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