Airbus to remove subsidies in bid to end US dispute

Airbus to remove subsidies in bid to end US dispute

Airbus announced on Friday that it had moved to eliminate subsidies deemed illegal by the World Trade Organization, in the latest move to end a long-running dispute with the US over state aid to aircraft manufacturers.

The company said it had agreed with the governments of France and Spain to amend launch aid arrangements that had been at the centre of the rift, which had led the US to target products from French wine to aircraft parts in retaliation against the state support.

Launch aid is a form of subsidy designed to help manufacturers develop new models. 

“After 16 years of litigation at the World Trade Organization, this is the final step to stop the longstanding dispute and removes any justification for US tariffs,” Airbus said in a statement.

“The tariffs imposed by the United States Trade Representative (USTR) are currently harming all targeted industry sectors, including US airlines, and are adding to a very difficult environment as a consequence of the Covid-19 crisis.”

The move is set to be welcomed by Brussels, which has sought for months to reach a settlement with the US to end the dispute.

Phil Hogan, EU trade commissioner, has bemoaned the lack of engagement by the Trump administration in coming to an agreement. The EU has a parallel action at the WTO against aid for Boeing, with a decision expected in September on the volume of retaliation the bloc can take against US products. 

Washington was awarded the right to impose punitive levies of as much as 100 per cent on $7.5bn of European goods — the result of a WTO decision last year that the EU had failed to eradicate illegal support for Airbus aircraft. The US has ratcheted up those levies in stages, with the next deadline falling in August.