Boeing, Airbus battle ahead of fresh WTO aircraft ruling

GENEVA, Jan 31, 2011 (AFP) - The WTO is expected on Monday to deliver a ruling to the United States and the EU on part of their long-running dispute over multibillion dollar aircraft industry subsidies.

The confidential ruling on a European complaint against an alleged 24 billion dollars in public aid for Boeing was last week dubbed an "important milestone" by the company's vice president for trade policy Ted Austell.

Washington and the 27-nation European bloc have been engaged in a tit-for-tat battle over subsidies for large civil aircraft since 2004.

The World Trade Organisation is already hearing an appeal by both sides against another ruling last June that partially upheld a US complaint on 18 billion dollars (13.1 billion euros) in subsidies for Airbus.

Air New Zealand Financial CEO Rob McDonald attends a press conference on January 28, 2011 in Colomiers during the first delivery of an A320 Airbus painted with the logo of New Zealand rugby national team, the All Blacks. Air Lease Corporation (ALC), the aircraft financing and leasing company, has taken delivery of its first brand new 320 aircraft directly ordered from Airbus and to be leased to and operated by Air New Zealand. AFP

Sources on both sides of the fence expect the WTO panel of arbitrators' latest verdict on aid for Boeing to be handed over to the two governments on Monday around 1530 GMT.

Under WTO rules, both sides are meant to keep it under wraps for about three more months.

Following interim findings released to the two sides last September, Airbus expects the WTO to award the European Union 45 billion dollars in compensation over "illegal aid" for its US rival.

Boeing last week rejected that claim as "simply ridiculous, as the two rivals continued their war of words.

Austell nonetheless accepted that the interim findings did show that some US support breached the rulebook, although the amounts are disputed.

A key issue in the EU complaint is state support for Boeing's military aerospace research and development, and its impact on civil aircraft production.

Trade insiders believe that the WTO dispute settlement panel will again fault both sides to varying degrees, prompting claims of vindication from Washington and Brussels and a renewed round of appeals.

"Both sides continue to see exactly what they want to see," said Richard Aboulafia, a vice president at Teal Group analysts.

"They won't stop creating national aircraft with government money," he added, pointing out that a defending country could change its method of support to fall in line.

Not all subsidies or public aid are illegal under WTO rules, which seek to stop those distorting international trade.

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