Will Boeing (BA) Benefit From The WTO Ruling On Airbus?
Zacks Investment Research | Oct 04, 2016 10:18PM ET
The battle between The Boeing Co. (NYSE:BA) and Airbus Group (PA:AIR) SE (OTC:EADSY) intensified after the World Trade Organization (“WTO”) ruled that the EU had failed to stop the supply of illegal funding to Airbus.
The Latest Development
On Monday, the U.S. government announced that it will implore the WTO to come up with a panel report that establishes the supply of unfair subsidies by the EU to Airbus. A special meeting could be held at the WTO on Oct 14 with the U.S. Trade Representative in the nation’s efforts to protect Boeing’s market position from unfair competition posed by the European plane maker.
What Led to the Conflict?
The battle between the U.S. and the EU over the latter’s state aid to Airbus alone began in 2004. Washington and Brussels had then filed complaints against each other, citing an international trade rules that government support is illegal if it is proven to be detrimental to the companies or industries of another WTO member state.
This was followed by a WTO order in 2011 to cease support and subsidy from the EU to Airbus. However, the EU failed to comply with the order. Interestingly, even though the WTO had refrained from providing an approximate value, Boeing alleged the illegal funding for Airbus’ development and sales to have reached as high as $22.0 billion.
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