An appeal has been filed by the European Commission against the World Trade Organisation (WTO)’s panel report, which found fault with subsidies and loans that EU governments made to Airbus. “This dispute is too important to allow the legal misinterpretation of the panel to go unchallenged,” said EU Trade Commissioner Karel De Gucht, on 21 July, announcing the moveThe appeal notification is available at  http://trade.ec.europa.eu/doclib/docs/2010/july/tradoc_146379.pdf. The appeal is broad in scope, taking issue with most of the findings contained in the 30 June WTO panel ruling. A decision on the appeal is not expected until at least October 2010. By that time the WTO should have adopted a preliminary finding in the EU’s case against the United States over US subsidies to Airbus’ main competitor, Boeing.

Not all the financial aid to Airbus over the past four decades was found to be inconsistent with WTO rules, the Commission notes. In particular, it is satisfied that the WTO excluded government support for Airbus’ A350 model from the scope of its ruling. As for the issues that the Commission is appealing, foremost is the German, Spanish and United Kingdom governments’ loans to develop the A380. These were not prohibited subsidies and did not favour exports over domestic sales, it argues. As for the WTO’s finding that loans were provided at too low an interest rate, the Commission is arguing that they were provided in accordance with a 1992 EU-US agreement on government support for large civilian aircraft. The US withdrew from this agreement, in 2004, just before filing the EU-Airbus case at the WTO.

The Commission is defending infrastructural aid provided in Toulouse, Hamburg and Bremen, saying Airbus paid either market rent or purchase price. It insists that French government capital injections to Airbus between 1987 and 1994 and in 1999 were soundly-based investments. It denies that R&D funding provided from the EU’s Research Framework Programme constituted a ‘specific subsidy’ to Airbus. And it says that Boeing has failed to prove that EU governments’ aid to Airbus caused adverse effects to Boeing in the form of lost aircraft sales.

Both sides are also gearing up for a WTO ruling in the Boeing case. This was originally due to come out on 16 July but the ruling has been postponed until mid-September. The EU hopes the WTO will find similar faults with US aids to Boeing and thereby level the playing field. And over at the US Department of Defence (DOD), the competition between Airbus’ parent company EADS and Boeing for a US$50 billion contract to supply 179 aerial refuelling tankers to the US Air Force is entering its final stages. The contract is due to be awarded sometime this autumn, with the DoD not giving a more specific date. The EU is adamant that the WTO cases should not be factored into the decision on the tanker contract. So far the US DoD agrees the two should not be linked.