In Brief

Airbus ruling 'brings threat of EU-US trade war'

World Trade Organisation says £17bn of illegal state aid - £3bn from UK - has been handed to aircraft-maker

French aircraft-maker Airbus has benefitted from as much as $22bn (£17bn) in illegal state aid from EU member states, including £3bn from the UK, the World Trade Organisation (WTO) has ruled.

The judgement marks the latest chapter in what the BBC brands the world's "largest and longest-running trade dispute". It will not by any means be the last.

On its own, the ruling has the potential to trigger a "trade war between the United States and the European Union", says The Times.

The WTO says the EU has failed to comply with as many as 34 diktats designed to prevent governments subsidising Airbus at the cost of competition - and to the ultimate detriment of its big US rival, Boeing.

In all, $22bn is deemed to have been given to the firm to help it bring aircraft to market. This has cost Boeing and the US $7bn-$10bn (£5bn-£7.5bn) a year.

Under WTO rules, that annual cost is the amount the US could now apply in retaliatory tariffs against EU imports of goods or services.

The European Union itself has won a number of rulings in the past against the support the US has provided to Boeing in the form of government loans and funding.

A statement from Brussels said the new judgement should be seen "in the context" of two compliance reports to come on Boeing in the near future.

Officials are inspecting the report "closely" and are likely to appeal, it adds.

However, that hasn't stopped the US government warning it could take those "retaliatory countermeasures", nor Boeing's chairman, Dennis Muilenburg, from cheering a ruling that "finally holds the EU and Airbus to account".

Airbus is separately under investigation by the Serious Fraud Office over the use of third-party agents to secure deals backed by government guarantees.

Airbus investigated by SFO over bribery and corruption claims

8 August

French airplane manufacturer Airbus has confirmed it is being investigated by the Serious Fraud Office inquiry over allegations of fraud, bribery and corruption.

The investigation centres on "irregularities" in the use of third-party intermediaries on export deals underwritten by the UK, France and Germany through so-called "export credits".

Airbus in April "admitted it had failed to notify authorities on the use of third-party agents in deals which it was asking the UK government to cover with financing guarantees", reports the Financial Times.

"The company disclosed at the time it had submitted flawed information for export credit financing applications," adds the Wall Street Journal, adding: "The use of such agents is permitted, but needs to be fully disclosed."

Since then, Airbus has been in talks with the SFO while credit export financing for the business, which accounted for six per cent of its overall revenues, has been suspended.

Airbus said in July it was involved in a process aimed at resuming access to credits by the end of the year. It is unclear how this will be affected by the SFO's proceedings.

"Third-party intermediaries have been the target of anti-bribery regulation and many companies have radically reduced the number of agents," says the FT. But, it adds: "It is still difficult in certain countries to do business without them."

Airbus is also the subject of a separate SFO inquiry running since 2012 into the dealings of a small unit based in Saudi Arabia.

The FT warns the latest "investigation could last several years and the cloud it casts will be aggressively exploited by the company’s US rival, Boeing". Officials in France, Germany or even further afield "could also launch their own inquiries into Airbus’s use of agents".

Recommended

Luna’s death spiral
An electronic board at a cryptocurrency exchange in Seoul
Why we’re talking about . . .

Luna’s death spiral

When will the Elizabeth line open?
The Elizabeth line entrance at Liverpool Street station in London
In Focus

When will the Elizabeth line open?

Is it worth paying off a student loan early?
University students graduate at Bath Abbey
Between the lines

Is it worth paying off a student loan early?

Trading currencies: what the experts think
The greenback is on the rise
Expert’s view

Trading currencies: what the experts think

Popular articles

The mysterious Russian oligarch deaths
Vladimir Putin has previously deployed ‘extreme measures’ to crush opposition
Why we’re talking about . . .

The mysterious Russian oligarch deaths

Depp v. Heard: what the latest battle has revealed
Amber Heard
In Depth

Depp v. Heard: what the latest battle has revealed

Is Vladimir Putin seriously ill?
Vladimir Putin
Why we’re talking about . . .

Is Vladimir Putin seriously ill?

The Week Footer Banner