And the winner is: We have no idea.
The World Trade Organization today published its decision on a case brought by the United States charging that Airbus received illegal subsidies, and that this caused harm to US aircraft manufacturer Boeing. The full text of the report is available on the WTO website.
Although the entire document is almost 1,100 pages long, the “Conclusions and Recommendation” section is a blessedly brief 5 pages. But whatever it has going for it in terms of brevity, the conclusions section offers very little clarity, and anyone who reads it can draw virtually any conclusion desired. To sum up very briefly, the WTO Panel that sat on the case concluded (among other things):
- that the US has established that certain actions by EU states constitute illegal subsidies, and
- that the US has not established that certain actions by EU states constitute illegal subsidies.
In some cases, these conclusions appear to have been made concerning the same actions. So, for example, after reading the report Boeing can say the WTO found the A380 program to be illegally subsidized and Airbus can say the WTO found the A380 program not to be illegally subsidized.
Then, there is the question of whether the subsidies had any negative impact on the US commercial jet industry. On this matter, the WTO’s conclusions seem just as contradictory as those above. For example, the WTO Panel concluded (among other things):
- that the US has established that the effect of the subsidies is significant lost sales in the same market, constituting serious prejudice to the interests of the United States
- that the US has not established that actions by EU states caused injury to the United States’ domestic industry
However vague and self-contradictory the report and its conclusions and recommendations are, one thing is certain: It will provide work for armies of lawyers for years to come. The Panel report has no force until it is formally adopted by the WTO, and it will not be adopted (or rejected) until appeals from both parties have been heard. A process that will almost certainly take many years.
And, to add to the fun, in a couple of weeks the WTO will publish its preliminary findings on a mirror-image case brought by the EU, charging that illegal subsidies offered to Boeing by various state and federal bodies in the US have caused serious harm to Airbus.
