Airbus Alters Jet Subsidies in Bid to Halt WTO Row, U.S. Tariffs

(Bloomberg) --

Airbus SE said it agreed to make changes to the A350 jet’s repayable launch aid from France and Spain to resolve a 16-year trade dispute and remove justification for U.S. tariffs against European goods.

The planemaker said Friday that risk-assessment benchmarks and interest rates will be amended in line with what the World Trade Organization deems appropriate. After that, Airbus says it will be compliant with all WTO rulings.

The U.S. got the green light last year to impose duties on $7.5 billion of European exports spanning French wine to Italian cheese and Scotch whisky in retaliation against unlawful support for Airbus. A tit-for-tat case is due to determine damages the European Union can seek over market-distorting help for Boeing Co., the biggest American planemaker.

“Airbus has left no stone unturned to find a way towards a solution,” Chief Executive Officer Guillaume Faury said in a statement. “We have fully complied with all the WTO requirements.”

Shares of Toulouse, France-based Airbus traded 3.2% lower as of 9:56 a.m. in Paris and are down 51% this year.

The changes by themselves will not automatically end the dispute or force the U.S. to scrap its tariffs, since the EU must now ask the WTO to determine whether they go far enough, something that could take a year or more. Still, the EU jumped on the Airbus announcement to demand that the U.S. act now.

‘Unjustified’

“We insist that the U.S. lifts these unjustified tariffs immediately,” EU Trade Commissioner Phil Hogan said in a statement.

He also repeated a longstanding plea to the U.S. to negotiate a general agreement on aid for planemakers, while reiterating a threat to hit American goods with tariffs once the WTO sets a limit on damages for the claim against Boeing in the coming months.

French Economy Minister Bruno Le Maire also called for a lifting of the levies, saying in a statement that the U.S. “no longer has any justification to maintain its trade sanctions against Europe.”

The Airbus move comes with the U.S. weighing new tariffs on European exports like olives, beer, gin and trucks and increased duties on products including aircraft. A month-long public comment period ends July 26.

Record Award

In October, the WTO determined the EU’s subsidies for the production of two Airbus wide-body models, the A350 and the now-discontinued A380 superjumbo, harmed sales at Chicago-based Boeing.

That resulted in the largest award in WTO history -- nearly twice as large as the previous record of $4.04 billion set in 2002.

Airbus has already repaid U.K. funding and amended a similar contract with Germany to remove an element of subsidy.

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