WTO Disputes Procedure Faces Biggest Task: Airbus and Boeing Subsidy Row

Strategic Insights -

The World Trade Organisation's (WTO) disputes procedure is facing one of its most significant challenges yet, as it prepares to mediate a row between the European Union (EU) and the US over billions of dollars in subsidies given to Airbus and Boeing. The EU claims that Boeing has received over $20 billion in indirect government support since 1992, while the US argues that European "launch aid" loans to Airbus violate WTO subsidy rules. This move has raised concerns among trade experts, who fear that taking such a big case involving a global duopoly through the WTO may not yield a productive outcome.

Key Takeaways:

  • The WTO disputes procedure is facing one of its biggest tasks, mediating in a row between the EU and the US over subsidies to Airbus and Boeing.
  • The EU claims that Boeing has received over $20 billion in indirect government support since 1992, while the US argues that European "launch aid" loans to Airbus violate WTO subsidy rules.
  • Trade experts have questioned the wisdom of taking such a big case involving a global duopoly through the WTO, with Gary Hufbauer of the Institute of International Economics suggesting that it may be a sign of desperation from Boeing, which has been losing market share.
  • The US has won 25 of the cases it has initiated before the WTO, but another 23 cases were settled before the dispute panel was able to rule, suggesting that the process may not yield a productive outcome.
  • The case may not go to the WTO's disputes panel, with the US aiming to use the litigation to add pressure for a negotiated settlement.
  • US officials point out that the case may not clog up the system, and that the WTO was created to channel disputes into a neutral forum where global rules can apply.

Statistics:

  • $20 billion: the amount of indirect government support the EU claims Boeing has received since 1992.
  • $20 billion: the amount of subsidies the US claims the EU has given to Airbus.
  • $11 billion: the equivalent of the EU's subsidy claims in pounds.
  • $4 billion: the estimated damages from the EU's foreign sales corporation tax case brought against the US.
  • 25: the number of cases the US has won before the WTO.
  • 23: the number of cases settled before the dispute panel was able to rule.
  • 18 months: the estimated time before a WTO disputes panel reports on the case.
  • 2-3 months: the estimated time to convene a WTO disputes panel.

Sources:

  • Richard Mills, USTR Spokesman,
  • Gary Hufbauer, Senior Fellow at the Institute of International Economics
  • Peter Mandelson, EU Trade Commissioner
  • Rob Portman, US Trade Representative