As U.S. Prepares To Retaliate Against Airbus Subsidies, Europe Refuses To Admit Guilt

If you think negotiations over the fiscal cliff are frustrating, then you should take a look at what the U.S. Trade Representative has been going through as he tries to convince Europe to get rid of illegal subsidies for commercial aircraft. For eight long years, the U.S. case has been slowly moving forward in the World Trade Organization’s baroque adjudication process, and European backers of Airbus have thrown up every obstacle they can think of to stop the case in its tracks. But at each step along the way, WTO panels have confirmed the core of the U.S. complaint: that Airbus has systematically violated trade treaties by using illegal subsidies to bring each of its planes to market, depriving U.S. aircraft makers of many billions of dollars in sales.

The picture of Airbus that emerges from the WTO deliberations is not inspiring. Applying the prevailing standards of free trade, the European aircraft company looks like a vast market distortion, an enterprise that trade-body representatives say might not exist at all in the absence of improper financing practices. The most important of these practices is called “launch aid,” a euphemism for billion-dollar government handouts that cannot be obtained through normal financing channels. Because Airbus rival Boeing must secure its own financing from market sources, it is at a decided disadvantage in developing and marketing its planes. In fact, it has steadily lost market share over the last 20 years despite developing products that are safer and more reliable than their Airbus counterparts.

But it isn’t just the WTO findings that make Airbus look so bad, it is the dishonesty with which the company’s backers have defended their practices that casts the European enterprise in such a negative light. Time after time, European representatives have sought to mislead the trade body concerning key facts, to distort the functioning of enforcement mechanisms, and to escape accountability for undermining the global trading system. The picture that emerges from European actions is one of governments who don’t care about accuracy or fairness as long as they get their way. Airbus employees speak of killing Boeing products by introducing more modern alternatives as if the illegality of the subsidies needed to develop those rival aircraft is of no consequence. It’s all about winning, period.

Fortunately for America and its last surviving commercial-transport manufacturer, the World Trade Organization remains a values-driven organization that sees through the lies that Airbus defenders regularly propound. So now we have reached the endgame. Because Airbus has ignored the WTO findings other than to fabricate make-believe displays of compliance, the U.S. Trade Representative is seeking authority from the trade body to impose billions of dollars in sanctions. Said sanctions would redress the unfair advantage that prohibited subsidies have provided to Airbus, and perhaps get Europe to finally comply with the terms of trade treaties. It would be a travesty if, in the eleventh hour, people in Washington said Europe’s economy is too weak right now to levy such punishment. Tens of thousands of U.S. aerospace workers have lost their jobs because the European supporters of Airbus didn’t care about playing fair, and now it is payback time.