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Aircraft industry

EU and US Agree to Delay Airbus Subsidy Payment in WTO Dispute

Strategic Insights

— 1 min read

The European Union has offered to delay the payment of launch aid for Airbus's A350 aircraft, potentially avoiding the largest trade dispute in World Trade Organisation history. The move comes ahead of a self-imposed deadline for settling the dispute over aircraft subsidies. Despite recent tensions between US and EU negotiators, both sides have expressed a willingness to continue reviewing the situation rather than triggering WTO litigation. The delay could impact the European group's ability to secure a competitive edge with its new A350 aircraft, set to rival Boeing's 787 Dreamliner.

Key Takeaways:

  • The EU has offered to delay the payment of launch aid for Airbus's A350 aircraft to avoid a WTO dispute.
  • The US has warned that disbursing launch aid would only prolong the truce and may lead to a WTO ruling that discourages US airlines from buying the A350.
  • Airbus has stated it would seek Euros1bn in launch aid for the A350, but Washington has threatened to reject the offer and take the dispute to the WTO.
  • Boeing's hopes for a WTO ruling may rely on discouraging US airlines from buying the A350, as it waits for a potential ruling that could hit imports with retaliatory trade sanctions.
  • The 90-day truce agreed upon in January has failed to yield an agreement on ending subsidies to civil aircraft, with both sides now reviewing the situation.
  • Airbus appears to have more to lose in the negotiations due to the imminent payment of A350 launch aid, while Washington's negotiators face uncertainty due to changes in the US administration.

Statistics:

  • The EU has offered to delay the payment of launch aid for Airbus's A350 aircraft.
  • The US has alleged that Airbus has received at least US$15bn in illegal launch aid from France, the UK, Germany, and Spain.
  • Boeing has received US$23 billion in prohibited subsidies since 1992, according to the EU.
  • The A350 is set to be a competitor to Boeing's 787 Dreamliner, partly built in Japan.
  • Airbus has stated it would seek Euros1bn in launch aid for the A350.
  • The US has warned that disbursing launch aid would only prolong the truce.

Sources:

  • Financial Times, Raphael Minder in Brussels and Edward Alden in Washington, April [no date given], "EU and US brinkmanship on Airbus subsidies".

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