AIR Airbus SE

By Dan Michaels and Pietro Lombardi 

Airbus SE has agreed with the Spanish and French governments to change some financial-support agreements in an attempt to bring an end to a yearslong trade dispute with the U.S.

The European plane maker said Friday that it thought the move would put it in full compliance with World Trade Organization guidelines and remove justification for U.S. tariffs.

The U.S. has for years argued that Airbus benefits from European government subsidies that have harmed the U.S. aerospace industry and its workers. Last year, it won authorization from the WTO to impose tariffs in response, and swiftly introduced levies on $7.5 billion worth of aircraft, food products like cheese and other goods from the European Union.

Earlier this year it said it would increase tariffs on aircraft coming from the EU while the dispute remained unsolved.

Airbus said Friday it wanted to end the dispute, which it said was adding to a difficult environment amid the coronavirus pandemic. European industries targeted by U.S. tariffs in the dispute have pressed Airbus and their governments to settle the fight because the new levies are compounding economic pain from the pandemic.

Airbus has agreed to change a so-called Repayable Launch Investment -- essentially government subsidized loans to help develop and produce new aircraft -- related to its A350 jetliner to abide by parameters considered appropriate by the WTO.

Under the changes announced Friday, Airbus will increase the payment it makes to governments on each A350 delivered to a customer. The increase will bring the interest rates Airbus pays on its government loans to market rates stipulated by the WTO, up from subsidized rates.

Friday's announcements regarding France and Spain follows a similar move with Germany in December, when Airbus also fully repaid U.K. government loans for the A350.

Airbus Chief Executive Guillaume Faury said the change demonstrates "that Airbus has left no stone unturned to find a way towards a solution."

The EU said in a statement that the move made "a strong case for a rapid settlement" of the dispute.

U.S. officials had no immediate comment. Washington didn't respond officially following the European moves in December. The WTO hasn't assessed those moves because operations in its appellate body have been blocked by a shortage of officials, which in turn is largely due to dissatisfaction in the U.S. with how the body has functioned in recent years.

It remains unclear whether the European move will satisfy U.S. negotiators. WTO disputes, including previous fights over aviation, have gone through multiple and protracted rounds of concessions that one side said brought compliance but the other rejected.

The dispute over aircraft subsidies dating back to 2004 and has become part of the Trump administration's trade negotiations with Europe. The two sides have been in formal negotiations since 2018 over a range of trade issues but have made little progress.

The WTO is expected to rule later this year on a related case brought by the EU against U.S. subsidies of Boeing. At that point, the EU could be authorized to strike back with tariffs of its own.

French Finance Minister Bruno Le Maire said Friday that Europeans want to discuss with the U.S. how to improve international rules for aircraft financing.

"But if the United States continues to refuse an amicable negotiation, the European Union will have no choice but to adopt tariff sanctions against American products, when the WTO will allow us to do so in a few weeks in the Boeing litigation," he said.

Noemie Bisserbe contributed to this article.

Write to Dan Michaels at dan.michaels@wsj.com and Pietro Lombardi at Pietro.Lombardi@dowjones.com

(END) Dow Jones Newswires

July 24, 2020 07:26 ET (11:26 GMT)

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