Airbus to double US investment as WTO row with Boeing subsidies continues

AIRBUS plans to double its annual US$12 million investment in US manufacturing by 2020 adding to the $1 billion it has already invested mostly in the Los Angeles area, according to a company press release. Airbus announced in July plans for a US manufacturing plant in Mobile, Alabama, to open by 2015, with the first aircraft deliveries planned for 2016.

The Airbus announcement comes after the European Union asked the World Trade Organisation (WTO) to issue $12 billion in annual sanctions against the US Government for its alleged non-compliance with an earlier WTO ruling against illegal state subsidies to Boeing.

The EU contends the US was supposed to end Boeing subsidies in March, and while Washington says that they ended in September EU says the US has "provided no detailed evidence to support its claims".

Said EU trade commissioner Karel De Gucht: "The United States failure to end aircraft subsidies continues to cost European aerospace companies billions of euros in lost revenue. By taking action today, the European Union continues to ensure that every one of our trading partners plays by the rules, and that every effort is made to create a level playing field for European companies and workers."

The EU claimed $19.1 billion in federal subsidies went to Boeing from 1989 and 2006. The WTO has since ruled that while some tax breaks were de facto subsidies, they also found that American state aid came closer to $5.3 billion.

On September 23, the US Government notified the WTO that is had withdrawn the subsidies, but the EU then called on the WTO take counter measures against the US for failing to eliminate the subsidies. The WTO was scheduled to take up the issue, titled "Measures affecting trade in large civil aircraft," during its October 23 meeting.

The EU move pleases Airbus. "Airbus is grateful to the EU Commission for taking consequential action. Boeing has been denying the decades of government support for years but was finally faced with a sweeping judgment in March. We regret that Boeing continues a legal battle." said the Airbus statement.