European Union giving illegal subsidies to Airbus

Watch video 01:05  Airbus to cut 3700 jobs in Europe

Watch video 01:05 Airbus to cut 3700 jobs in Europe

In its ruling on Tuesday, the World Trade Organization (WTO) said the European Union had failed to remove support in the form of preferential government loans for Airbus's A380 superjumbo and A350 twin-aisle jet programs, causing losses for Boeing and U.S. aerospace workers.

But the WTO also dismissed USA claims that loans for the A320 and A330, the most popular Airbus models, were also costing Boeing significant sales, thus narrowing the scope of the ruling. "The EU will now take swift action to bring itself into line with WTO rules as regards its remaining obligations", she said in a statement.

The court confirmed that in May 2011 the European Union and four of its member States (Germany, France, the United Kingdom, and Spain) conferred more than $18bn in subsidized financing to Airbus and had caused Boeing to lose sales of more than 300 aircraft and market share throughout the world.

Shares of Airbus reversed earlier gains to trade down as much as 1.8% immediately after the ruling was published. "It shatters Boeing's claim it perpetuated for years that their WTO case undermines European industrial-government partnership".

Later this year, the WTO is expected to issue a final ruling in a separate case in which the European Union challenged billions of dollars in US aid to Boeing.

European Trade Commissioner Cecilia Malmstroem insisted that the ruling also rejected "the vast majority" of U.S. claims against it, while saying in a statement that the bloc "will now take swift action to ensure it is fully in line with the WTO's final decision in this case". NJ gov signs bill to skirt GOP tax law provision MORE (R-Texas) said in a statement.

The size of USA tariffs to be allowed will be determined through a WTO arbitration process, and will be based on the annual harm to United States and Boeing - losses that the U.S. had previously pegged as ranging from $7bn to $10bn a year.

The CEO of Airbus, Tom Enders said, "Today's report is really only half the story".

The WTO case has yielded 5,000 pages of filings and cost tens of millions of dollars. Airbus also notes that Boeing is reportedly seeking further illegal tax breaks for the planned construction of the mid-sized B797 aircraft. Airbus estimates the total amount of lost sales since the beginning of these disputes at over $100bn. Boeing has estimated that it suffered commercial damages worth between US$7 billion and US$10 billion as a result. It is anticipated that USA tariffs will be authorized up to the amount of annual harm the subsidies are determined to cause.

The litigation adds to the tension between the U.S. and Europe, two once-cooperative trade partners that are already sparring over U.S. President Donald Trump's steel and aluminum tariffs and his decision to back out of a nuclear treaty with Iran, jeopardizing $40 billion in aircraft sales.

A big trade ruling in the long battle between Airbus and Boeing left both sides cheering.

But the organization also overturned a previous ruling that found the subsidies were hurting sales of the single-aisle 737, Boeing's most popular plane.

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