U.S. reps. call out Airbus subsidies on eve of Boeing ruling

Sep 14, 2010

Seattle PI

By Aubrey Cohen


With a World Trade Organization panel expected to release a ruling on U.S. subsidies to Boeing Wednesday, more than 80 members of the U.S. House of Representatives signed onto a letter Tuesday commending U.S. Trade Representative Ron Kirk for his work on a WTO finding that European governments illegally subsidized Airbus.
"We write to congratulate you on the World Trade Organization's (WTO) ruling on the matter of European government subsidies to the aerospace manufacturer Airbus," they wrote.

"Despite this ruling, European officials have indicated that they will continue to provide launch aid for Airbus' newest jet, the A350," they added. "We urge you to continue to work to ensure that European governments come into compliance with WTO rules."

Reps. Rick Larsen, D-Wash., and Don Manzullo, R-Ill., led the group, which includes Reps. Sander Levin, D-Mich., and Dave Camp, R-Mich., who are, respectively, the chairman and ranking member of the House Ways and Means Committee, which has jurisdiction over U.S. trade policy.
"I will keep fighting to bring attention to the illegal subsidies that Airbus has received and help ensure that American workers can compete on a level playing field," Larsen said in a news release.

Here's the full letter.

September 14, 2010

The Honorable Ron Kirk
United States Trade Representative

Dear Ambassador Kirk:

We write to congratulate you on the World Trade Organization's (WTO) ruling on the matter of European government subsidies to the aerospace manufacturer Airbus. This trade enforcement action will help level the playing field for American companies and protect American aerospace workers from unfair competition.

For decades, European governments have provided Airbus with billions of dollars in subsidies, allowing Airbus to undercut its competitors' prices and seize market share. As a result of these subsidies, thousands of American aerospace workers lost good manufacturing jobs.

As you know, in 2004, the Bush Administration, led by U.S. Trade Representative Robert Zoellick, filed a complaint with the WTO alleging that Airbus had received billions in illegal subsidies (later valued in 2006 dollars as worth a staggering $200 billion). On June 30, 2010, the WTO issued a final panel ruling in the case, finding that subsidies granted to Airbus violated international trade law.

Specifically, the WTO concluded that European governments provided a "massive" amount of illegal subsidies for the development of every Airbus aircraft model ever built. The WTO also determined that the $4 billion in "launch aid" for the A380 included "prohibited export subsidies" - an even more egregious form of subsidy. All of these subsidies must be withdrawn.

Despite this ruling, European officials have indicated that they will continue to provide launch aid for Airbus' newest jet, the A350. We urge you to continue to work to ensure that European governments come into compliance with WTO rules.

The implications of this ruling extend beyond the immediate dispute between European governments and the U.S. The market for large commercial aircraft is forecasted to be more than $3 trillion over the next twenty years. American companies can compete against any rival, but not foreign treasuries. The WTO's panel ruling sends a strong message that competitors seeking to enter this market must comply with international trade laws and avoid anti-competitive behavior.

We commend you and the entire team at the Office the U.S. Trade Representative for your dedication to this case.