World trade body ruling reflects pre-crisis time

WASHINGTON — The World Trade Organization’s ruling that European loans for Airbus were illegal subsidies is being cheered by U.S. lawmakers loyal to the Boeing Co., even though the preliminary decision may seem quaint in a world where government subsidies, bailouts and takeovers are now commonplace.

Friday’s ruling reflects the world as it existed five years ago when the United States brought the case against the European Union, arguing that such subsidies were unfair trading practices.

But since then, the deep global recession has led to hundreds of billions of dollars in government subsidies and intervention in nearly all the world’s major economies, including big government ownership stakes in banks, and auto and insurance companies.

Furthermore, other countries, including China, Japan and Brazil, are busy expanding or developing their domestic airline industries.

At issue is a 1,000-page confidential ruling that was given to U.S. and European trade officials. It was not released yet, and officials were under instructions not to speak publicly.

Still, lawmakers from Washington state and other U.S. states where Chicago-headquartered Boeing has a major presence were briefed by the Office of the U.S. Trade Representative on Friday.

Sen. Patty Murray, D-Wash., who led efforts in 2004 to get the Bush administration to initiate the WTO case, said the ruling “confirms that Boeing has been competing on an uneven playing field for decades.”

Friday’s decision confirms that “all Airbus aircraft have received illegal subsidies and that these have caused material harm to Boeing,” said Rep. Norm Dicks, D-Wash.

Neither Boeing nor Airbus would comment on the ruling publicly, nor would U.S. or E.U. trade officials.

However, European officials who were briefed had a somewhat different take on the ruling than American lawmakers, suggesting that it was more of a mixed bag and that many of the complaints lodged by the U.S. had been dismissed and the government loans to Airbus were in some instances deemed a permissible form of financing.

The WTO finding was the first step in a process that could take years to produce a final result.

The organization doesn’t have the power to impose sanctions itself, but it can allow a nation that has been harmed — in this case the U.S. — to raise tariffs or impose other barriers to imports from an offending country or countries.

And that wouldn’t be limited to aircraft. It could also include, for instance, purses, sweaters or French wines. The amount of such tariffs could be high enough to offset the damages done by the illegal practices.

Friday’s ruling was Part One of the process. A ruling on an EU counter-complaint against the U.S. claiming that the Pentagon and NASA are indirectly subsidizing Boeing is being heard by a separate WTO panel and a ruling is expected in about six months.

Both disputes in the Boeing-Airbus rivalry are over what is projected to be a $3.2 trillion global aviation market over the next 20 years.

Associated Press writers Alexander G. Higgins in Geneva, Mike Obel in New York and Donna Borak and Martin Crutsinger in Washington contributed to this report.