By BRADLEY S. KLAPPER
Associated Press
3/24/2010

GENEVA — The World Trade Organization ruled that European governments
unfairly financed planemaker Airbus' battle against U.S. rival Boeing,
officials said, even as the France-based Airbus claimed the decision as a
victory.

Three officials with knowledge of the confidential WTO ruling Tuesday in
the long-running trade dispute said it upheld findings of an interim
decision handed down last September that faulted European governments for
providing Airbus with subsidies through risk-free loans, research funding
and infrastructure support.

Airbus, however, said "70 percent of the U.S. claims were rejected" and
that the WTO panel dismissed Boeing's claim that its performance suffered
as a result of European subsidies. In that case, it would be a victory for
Airbus and the European Union ahead of a possible June ruling on alleged
U.S. subsidies to The Boeing Co.

While the WTO's report won't halt European subsidies for Airbus, the two
disputes could provide tighter guidelines for how far governments can go in
supporting companies in a market worth more than $3 trillion over the next
two decades.

With emerging powers such as China looking to break the two-company
dominance of the airliner industry, clearer rules on public support will
become even more important in the future.

The three officials spoke to The Associated Press on condition of anonymity
because of the sensitivity of the ruling.

One official said the WTO panel found that Europe was, in some cases,
unfairly subsidizing Airbus through "launch aid" because the planemaker
only repays the loans as new planes are sold. For some planes, however, the
U.S. failed to demonstrate that the subsidies actually harmed Boeing, a key
requirement for proving wrongdoing.

But the three-member panel also found against Airbus' European backers
Britain, France, Germany and Spain for providing what was ruled illegal
infrastructure support and research and development funding. Officials said
the ruling also confirmed examples of Airbus receiving export subsidies,
which are prohibited under international trade rules.

The Geneva trade body can't force countries or companies to eliminate
subsidies, but it can authorize retaliatory sanctions against countries
that fail to comply with rulings. It generally takes years to reach that
stage, and sanctions could be more than a decade away.

Speaking ahead of the ruling, Boeing vice president Ted Austell said the
WTO's decision was important for "the hundreds of thousands of U.S.
aerospace workers who've had to compete with an illegally subsidized
Airbus."

"Illegal European subsidies have done great harm to the U.S. aerospace
industry," Austell said. "It's time to level the playing field and let
companies compete on product, price, innovation and customer support
without market-distorting government subsidies."

But an Airbus statement said it learned that the ruling rejected Boeing
claims of lost U.S. jobs.