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European Union

US Withdraws from Decade-Old Agreement with EU, to Pursue WTO Case Against Airbus Subsidies

Strategic Insights

— 1 min read

The United States has officially withdrawn from a 1992 agreement with the European Union on civil aircraft manufacturing, with the US Trade Representative, Robert Zoellick, announcing that the government will request a dispute settlement case in the World Trade Organization (WTO) to address what it considers unfair subsidies provided to Airbus by European governments. The move follows failed discussions between the two sides to reach a new agreement, with Boeing officials supporting the US decision. European officials, however, argue that the loans provided to Airbus should be weighed against support received by Boeing from US government sources.

Key Takeaways:

  • The US is withdrawing from a 1992 agreement with the EU on civil aircraft manufacturing, citing unfair subsidies provided to Airbus by European governments.
  • The US Trade Representative, Robert Zoellick, has announced that the government will request a dispute settlement case in the WTO to address the issue.
  • Boeing officials have supported the US decision, arguing that the European subsidies must stop.
  • European officials argue that the loans provided to Airbus should be weighed against support received by Boeing from US government sources.
  • The WTO allows for 60 days of consultations and mediations after a request for dispute settlement is submitted, followed by a panel appointment and a decision within a year.
  • EADS, the parent company of Airbus, has stated that the US decision is "disappointing" and that the facts of the issue are not clearly understood.
  • The dispute between the US and EU on civil aircraft manufacturing subsidies has implications for the defense sector, including commercially derived military aircraft and Pentagon funding for research and development.

Statistics:

  • The 1992 agreement between the US and EU on civil aircraft manufacturing has been in place for over 12 years.
  • The WTO allows for 60 days of consultations and mediations after a request for dispute settlement is submitted.
  • The WTO typically adopts a decision within a year of a panel appointment.
  • Airbus has received significant subsidies from European governments, including loans for new aircraft launches.

Sources:

  • Sharon Weinberger, "US Withdraws From Decade-Old Agreement With EU On Civil Aircraft Manufacturing", [Copyright 2004 PBI Media, LLC. All rights reserved.]

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