European aircraft manufacturer Airbus said today that a long-awaited World Trade Organization (WTO) ruling on the legality of government subsidies in the aviation industry has been decided largely in its favour, according to dpa. In a statement, Airbus said that the WTO had rejected "70 per cent" of the claims by US manufacturer Boeing that it had received illegal state subsidies. "The European reimbursable loan mechanism is confirmed to be a legal and compliant instrument of partnership between government and industry," Airbus said. The WTO had also denied the US request for damage payments "as legally inappropriate." The major bone of contention in the dispute is the reimbursable launch investment (RLI) that Airbus receives from European governments, with the money to be paid back with interest. The agreement allows up to 33 per cent of a programme's cost to be met through government loans which are to be fully repaid within 17 years with interest and royalties. In 2004, Boeing challenged the RLI, saying it constituted an abuse of a 1992 US-EU agreement. Airbus maintained that the system is fully compliant with both the 1992 accord and WTO rules. The European Commission in turn brought a counter-claim against Washington regarding what it said was financial assistance to Boeing through large tax breaks and so-called pork barrel military contracts awarded by the US government. A first ruling on these claims is expected in June. Combined, the two cases are seen as the largest ever at the WTO, and are expected to rewrite many rules for the industry. Airbus also said Tuesday that the WTO panel found that neither European RLI nor any other measure caused "material injury" to US interests. "This means that the panel has rejected the US claims that (the) European measure caused job losses or lost profits in the US aircraft industry," Airbus said, adding: "Boeing claims of lost US jobs have now been judged and found to be false."
