Page last updated at 23:31 GMT, Friday, 4 September 2009 00:31 UK

WTO rules on huge plane dispute

Airbus A340 (file image)
Both the US and Europe are claiming some kind of victory

The World Trade Organization (WTO) has given its long-awaited ruling on the biggest trade dispute in its history.

The decision, which is officially confidential, is over whether the European Union gave illegal subsidies to planemaker Airbus as the US argues.

The Wall Street Journal and others reported that the WTO had found in favour of the US position.

But a UK government source told the BBC that the WTO verdict was much more of a "mixed outcome".

"The decision really questions the wisdom of taking this to the WTO in the first place," the UK source said.

"Boeing will be far from jubilant tonight."

Both US and European diplomats have declined to officially release the ruling, which is more than 1,000 pages long.

The decision is not expected to be officially made public for at least several months.

Partially upheld?

The EU has also made a counter claim against the US for its support of Boeing. A ruling on the EU's claim against the US is due in the next six to eight months.

The ruling on Airbus comes after five years of deliberations.

Other US news reports had suggested that subsidies from Brussels were illegal under world trade rules.

US Representative Norm Dicks, who was briefed by US trade officials, told the Associated Press that the WTO ruling confirms the original complaint by the U.S. from 2004.

"For many years we have contended that direct financial assistance from the European governmental partners of Airbus has represented an unfair launch subsidy that has allowed Airbus to increase its market share in the large civil aircraft market and to steal US aircraft manufacturing jobs," he said.

"Today's interim ruling from the WTO panel definitively confirms that contention."

Mr Dicks represents the US state of Washington, where Boeing is based.

But the UK government source told the BBC said the verdict did not suggest that the EU had engaged in systematic aid to Airbus.

Aid given by the EU to the European aircraft maker for its A350 aircraft was not cited, for example, the source said.

'Good case'

Experts say the WTO's decision will set the boundaries for acceptable government funding in civil aviation.

But Howard Wheeldon, senior strategist at BGC Partners, said there was still a long way to go in the saga.

"This whole WTO process is going to last four to five years. It's going to be 2013 at least before we get a final settlement on this," he said.

He added that Boeing and Airbus have to find terms so that they can work together based on what the WTO actually rules.

Louis Gallois, the chief executive of Airbus's parent company EADS, said before the decision that he believes the company has a "very good case".



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