Global Trade Tensions Escalate as US and EU Diverge on Airbus and Boeing Support

Strategic Insights -

Disputes between the US and the European Union over support for Airbus and Boeing have escalated, threatening to derail global efforts towards freer trade. The EU has announced it will revive its case against US support for Boeing, and the US has initiated WTO litigation against the EU for loans to Airbus. This escalation follows growing tensions over Chinese textiles, with China criticizing planned restrictions on its exports.

Key Takeaways:

  • The US and the EU are engaged in a trade dispute over support for Boeing and Airbus, with both sides initiating WTO litigation.
  • The dispute has escalated to a "triple whammy" of conflicts, including the Chinese textile dispute, the French referendum result, and the Boeing-Airbus complaints.
  • EU Trade Commissioner Peter Mandelson has lamented the decision to trigger litigation, suggesting it may widen to include Japan.
  • Sir Peter Sutherland, chairman of Goldman Sachs International, has called for the dispute to be placed back in the context of bilateral negotiations.
  • The US has rejected the idea that it is jeopardizing global trade, citing past examples of successful cooperation in trade talks despite big disputes.

Statistics:

  • The Doha round of trade liberalisation talks are already behind schedule, with a full ministerial meeting set for Hong Kong in December.
  • The WTO dispute settlement mechanism has been used successfully in the past to resolve big disputes, including the US-EU steel tariffs and tax rebate on foreign sales.
  • The EU has estimated that the Airbus-Boeing litigation is likely to be self-defeating, with a potential trade war harming both sides.

Sources:

  • "EU to revive WTO case against US over Boeing support" - Financial Times (no date)
  • "US and EU locked in trade dispute" - BBC News (no date)
  • "China criticises planned restrictions on exports" - Reuters (no date)