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Aircraft industry

EU-Airbus Dispute: US Threatens Litigation and EU Offers Reduced Government Loans

Strategic Insights

— 2 min read

The dispute between the European Union and the United States over development aid to Airbus and Boeing has reached a stalemate, with US Deputy Secretary of State Robert B. Zoellick warning that the United States is prepared to take the case to arbitration at the World Trade Organization if the EU does not comply with agreed principles. Meanwhile, the European Union has offered to reduce government loans to Airbus in return for a commensurate reduction in US subsidies to Boeing. The dispute centers on low-interest loans provided by EU governments to Airbus, which the US claims amount to more than $15 billion since 1967, and subsidies received by Boeing through military contracts, foreign government support, and tax breaks estimated to be as high as $23 billion since 1992.

Key Takeaways:

  • The US and EU have reached an impasse in negotiations over development aid to Airbus and Boeing.
  • The US is prepared to take the case to arbitration at the World Trade Organization if the EU does not comply with agreed principles.
  • The EU has offered to reduce government loans to Airbus in return for a commensurate reduction in US subsidies to Boeing.
  • The dispute centers on low-interest loans provided by EU governments to Airbus, which the US claims amount to more than $15 billion since 1967.
  • The EU claims that Boeing receives unfair support, including military contracts, foreign government support, and tax breaks, worth up to $23 billion since 1992.
  • The dispute has implications for the Doha trade agenda, with EU Trade Commissioner Peter Mandelson warning that a dispute at the W.T.O. could undermine relations and hurt prospects for a global trade deal.

Statistics:

  • The US claims that EU governments have provided more than $15 billion in low-interest loans to Airbus since 1967.
  • The EU estimates that Boeing has received up to $23 billion in unfair support since 1992, including military contracts, foreign government support, and tax breaks.
  • The Doha trade agenda, launched in 2001 in Qatar, aims to reduce trade barriers and promote economic growth worldwide.
  • The EU has agreed to suspend any new aid and litigation at the W.T.O. until April 11.

Sources:

  • The Washington Post (January 2006) - Opinion piece by EU Trade Commissioner Peter Mandelson.
  • Reuters (March 26, 2006) - Article citing comments by US Deputy Secretary of State Robert B. Zoellick.
  • Associated Press (March 26, 2006) - Article citing comments by EU Trade Commissioner Peter Mandelson and US Deputy Secretary of State Robert B. Zoellick.

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