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WTO to Examine Dispute between Airbus and Boeing

  • Lisa Schlein

The World Trade Organization has agreed to examine two high-profile disputes over alleged multi-billion dollar state subsidies given to aviation giants Airbus and Boeing. Two panels will be established to investigate the merits of complaints brought by the European Union and United States.

Washington and Brussels accuse each other of violating world trade rules by handing out billions of dollars in subsidies to two of the world's largest civil aircraft makers, Europe's Airbus and the U.S. Boeing corporation.

Informed observers say the dispute between the United States and the European Union could be the biggest trade battle in history. But WTO spokesman Keith Rockwell steers away from this description.

"By virtue of the fact that they have brought the case here means that it will not be a battle," he said. "It will be a legal procedure conducted under rules that have been agreed to by all parties in a predictable and relatively civilized fashion. I guess from the legal point of view, it will be a legal battle. A battle is always a pejorative word. I try to steer clear of it. But it certainly will be a legal entanglement, shall we say."

Washington was the first to go to the WTO. In October, it accused the Europeans of unfair trade practices because of the support they give to Airbus. This prompted a tit-for-tat reaction from Brussels, which accused the United States of providing Boeing with trade distorting subsidies.

Airbus A380 flies past tailfin of a Boeing during the Paris Air Show
The United States says Airbus has received billions of dollars of assistance from EU countries, including $6.7 billion in subsidies for its A-380 super jumbo. The European Union says Boeing has benefited from even larger amounts of aid from huge U.S. defense contracts and from the state of Washington, where the aircraft maker has manufacturing facilities.

Bilateral negotiations between the two powerful blocs failed to resolve the issue. Consequently, both sides made a second request for the establishment of twin dispute panels. Under WTO rules, Mr. Rockwell says, these requests were automatically granted.

"We prefer to have members when they can settle things out of court. But, if they prefer to bring matters here, they have every right to do so," he said. "Each side alleges the other has violated the WTO subsidies agreement by providing subsidies above and beyond what WTO rules allow for these respective aircraft manufacturers. In a nutshell, that is it. We will have to wait and see how things unfold."

Mr. Rockwell agrees it might be a long time before anyone knows how things will be resolved. He says it could take several weeks before the two panels are formed and then another six to nine months before the judges come out with their rulings. After that, he says each side has a right to appeal, thus dragging out the matter even further.

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