The report, of more than 1,000 pages, was published on Wednesday after being issued confidentially to the United States and EU on March 23. The panel, which was chaired by Uruguay's former ambassador to the WTO, Carlos Perez del Castillo, was formed in 2005.
The United States had complained that the development and marketing of Airbus airliners was only possible thanks to a program of "launch aid" and other financial support by the EU and some of its member states on non-commercial terms.
It said this aid comprised illegal subsidies, which hurt the U.S. civil aircraft industry by depriving it of market share.
"LAUNCH AID"
- The panel agreed that support for the Airbus A300, A310, A320, A330, A340, A380 airliners constituted launch aid.
- It did not agree that support for the A350 was launch aid, as it did not examine the A350 program, launched after the complaint was filed.
- It found that the United States had not proved that there was a coherent, systematic launch aid program.
SUBSIDIES
- The panel found that German, British and Spanish funding for the A380 airliner amounted to de facto export subsidies.
- It disagreed that French aid for the A330, A340 and A380 and Spanish aid for the A340 were export subsidies.
- It did not agree that the export subsidies were based on a legal requirement to export - i.e. that funding was formally conditional on achieving exports.
- It disagreed that loans by the European Investment Bank (EIB) to the Airbus program amounted to specific subsidies under WTO rules.
- It found that some but not all infrastructure spending by member states was a specific subsidy to Airbus.
- It found that the transfer of the German government's 20 per cent stake in Deutsche Airbus to KfW, a state-owned bank, and then to MBB, subsequently acquired by Daimler, was a specific subsidy. In particular, KfW's sale of the stake in 1992 to MBB was below market rates.
- It disagreed that debt forgiveness by the German government was a specific subsidy.
- It agreed that equity infusions by the French government and Credit Lyonnais were specific subsidies.
- It agreed that some but not all research and development spending on the Airbus program was a specific subsidy. (The panel estimated the total value of R&D spending at about €750-million, against a U.S. claim of €2-billion and an EU estimate of €381-million.)
MARKET IMPACT
- The panel found that Boeing's share of sales of large civil aircraft to the EU market declined while Airbus's increased over the period under review (2001-2006)
- It found that imports of Boeing to the EU were displaced by Airbus.
- It found that Airbus displaced Boeing sales in Australia, China, and India, and to a lesser extent in Brazil, Mexico, Singapore, South Korea and Taiwan.
- It found that the United States did not prove that Airbus had undercut prices.
- It agreed the Airbus program had led to the suppression or depression of prices for Boeing 737, 767 and 747 airliners but not the Boeing 777. (Suppression is when prices are prevented from rising, depression when they are pushed down.)
- It agreed with the United States that launch aid shifted the risk of launching aircraft to the government from the manufacturer through non-commercial funding.
- It agreed with the United States that Airbus's ability to launch each model was dependent on subsidies.
- It agreed that Airbus could not have marketed planes when it did without specific subsidies from the EU, Britain France, Germany and Spain.
- It concluded that if Airbus had launched and marketed the planes without subsidies it would have been a much different and weaker company.
- It found that without subsidies Airbus would not have had the market share it did in 2001-2006.
- It found that without the Airbus subsidies, the United States would have had a bigger share in EU and third markets.
- It found that Airbus's market share was a result of subsidies.
- It disagreed with the United States that the subsidies allowed Airbus to price more aggressively (i.e. any suppression or depression of prices was not caused by subsidies).
IMPACT ON U.S. INDUSTRY
- It agreed that the subsidies had displaced Boeing in EU and third markets, causing "serious prejudice" to the United States.
- It disagreed that the subsidies led to price undercutting, suppression or depression.
- It found that Boeing recovered in 2005-2006 after performing poorly in 2001-2003 so there was no material injury to U.S. domestic industry.
- It found that the EU had nullified and impaired benefits to the United States that it was entitled to under WTO agreements.
RECOMMENDATIONS
- The panel recommended that prohibited export subsidies be withdrawn "without delay" and said this meant within 90 days of adoption of its report by the WTO.
- It said the EU should remove the adverse effects of subsidies or withdraw subsidies causing adverse effects.
- It made no recommendations on how the EU should do this (and the United States. did not ask for recommendations)