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| WTO set to rule on Airbus subsidies |
| D Ravi Kanth / Geneva Sep 02, 2009, 00:43 IST |
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The ruling can cast Airbus in bad light as cotton subsidies did to America, say analysts
In a matter of 24 hours, the United States would acquire dual and conflicting images at the World Trade Organization (WTO). From holding the status of a violator, due to its non-compliance of the WTO dispute settlement body’s recommendations in the cotton case, Washington could become the champion for correcting the civil aircraft subsidies, as provided by the European governments to Airbus today, analysts said.
On Monday, WTO arbitrators gave the green signal to Brazil to slap trade retaliatory measures on American imports of some $294.7 million due to Washington’s failure to comply with the trade body’s highest court ruling against US cotton subsidies.
Brazil’s trade envoy Ambassador Roberto Azevedo sharply rebuked the US for not complying with the WTO dispute settlement body’s recommendations, saying that Washington’s failure to implement the cotton ruling raised a cloud on the Doha commitments as well.
The WTO arbitrators pronounced that Brazil is entitled to impose offsetting trade measures of a fixed amount of $147.3 million per year, which corresponds to the subsidies that cause “serious prejudice” to Brazilian growers in the form of price suppression of international cotton prices and a variable amount in respect to “prohibited” subsidies to be updated each year on the basis of data on US exports of several commodities that benefit from the GSM-102 export credit guarantee programme. Using data from 2006, the arbitrators said Brazil is entitled to cumulative amount of countermeasures to $294 million in that year.
However, in sharp contrast to the ignominy suffered in the cotton dispute, the US would secure a verdict on its complaint whether the European aircraft consortium Airbus is a beneficiary of illegal subsidies running into billions of dollars.
Indications are that Washington might receive a mixed but positive result on its major challenge against the so-called “launch aid” of about $15 billion, as provided by the European governments to Airbus.
Billed as the biggest dispute in the history of the GATT/WTO, the ruling could cast Airbus in bad light as the cotton subsidies did to America, analysts added.
Unlike the cotton indictment against the US, the Airbus ruling will take several years to know the full consequences. The ruling on Airbus “doesn’t mean much” as there are several legal hurdles to be crossed, an Airbus official said, suggesting that “it’s like what happens in the first quarter of a football match. The ball still goes back and forth for another 45 minutes,” the official said.
In crux, the US is already painted as a villain in causing distortions in the global cotton market because of its farm subsidies, while the EU might have to face a similar predicament in regard to its Airbus subsidies, analysts said.
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