US and EU Miss Deadline to Eliminate Aircraft Subsidies, Threatening Global Aviation Industry

The United States and European Union have missed a critical deadline to eliminate aircraft subsidies, leaving the future of billions of dollars in loans and tax breaks for top commercial airplane manufacturers uncertain. The two sides were unable to reach an agreement by April 11, despite efforts to negotiate, and are now facing the possibility of a costly World Trade Organization case. The dispute centers on subsidies for Airbus and Boeing, the world's top two commercial aircraft manufacturers, which are locked in a high-stakes competition to develop and market the next generation of commercial aircraft.

Key Takeaways:

• The US and EU missed a deadline to eliminate aircraft subsidies, setting the stage for a potentially costly World Trade Organization case.
• Airbus and Boeing, the world's top two commercial aircraft manufacturers, are at the center of the dispute, which centers on billions of dollars in loans and tax breaks.
• Airbus has requested $1.7 billion in loans to design and build the A350, while Boeing wants such loans negotiated out of existence or ruled illegal by the WTO.
• The two sides have been negotiating since January, but failed to reach an agreement, and now risk a two-year WTO case that could hurt both companies.
• The case could also involve Japan, which pays local Boeing subsidiaries to help build aircraft parts, a subsidy that the US claims is already ruled illegal by the WTO.
• The US Trade Representative's Office has said the administration "remains prepared to negotiate" and will return to WTO dispute settlement if the EU proceeds with additional subsidies for Airbus.
• The dispute highlights the complexity of the issues involved, with both sides accusing each other of breaking agreements and refusing to compromise.

Statistics:

• $1.7 billion: The amount of loans Airbus has requested to design and build the A350.
• $15 billion: The amount of low-cost, no-risk loans Airbus has already received, which the US claims are unfair subsidies.
• $23 billion: The amount of subsidies Boeing has received since 1992, including local tax breaks, infrastructure support, defense contracts, and NASA research.
• 2 years: The potential duration of a World Trade Organization case, which could hurt both Airbus and Boeing.

Sources:

• Jeffrey Sparshott, THE WASHINGTON TIMES
• Peter Mandelson, EU trade commissioner
• Richard Mills, spokesman for the U.S. Trade Representative's Office
• World Trade Organization
• Airbus
• Boeing