The U.S.-E.U. WTO Airbus-Boeing Trade Subsidy Dispute

Image: World Trade Organization Logo, Wikimedia Commons 

The World Trade Organization (WTO) is slated to issue a confidential ruling today on the US's case against the European Union (EU) alleging unfair trade subsidies to Airbus (EAD.PA), totaling $205 billion from France, Germany, Spain, and Britian over a 20 year period. International trade commentators anticipate that the WTO's ruling will confirm that the EU's aid to Airbus included unfair trade subsidies.

In October 2004, the US filed the case with the WTO in what would become the biggest international trade case against the EU. This is asserted to include below market interest loans and other benefits from the EU to Airbus. State aid repaid by Airbus may be adjudged by the WTO as legal if the interest paid was market rate.

If deemed market-distorting government subsidies, EU subsidies to Airbus will then raise the issue of assessing damages and/or trade sanctions against the EU for 20 years of unfair trade practices in the aerospace industry. In making such an assessment, the WTO would consider the harm to the US aerospace industry due to it being hindered from competing on a level playing field in the market because of the EU's market distorting subsidies. An important market distortion from illegal state subsidies include hindering fair competition by government distorting market pricing for services and business innovations.

The EU also filed a countersuit with the WTO against the US alleging unfair trade subsidies by the US to Boeing (BA.N). The countersuit will not likely be ruled on by the WTO for a few months. Ted Austell, vice president, Executive, Legislative and Regulatory Affairs with Boeing stated on March 22 that "[w]e look forward to the WTO's final decision."

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