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Aircraft industry

WTO Sets Up Panels to Investigate Airbus and Boeing Subsidies

Strategic Insights

— 2 min read

The World Trade Organization has set up panels to investigate allegedly illegal subsidies paid by the European Union and the United States to airplane makers Airbus SAS and Boeing Co. The dispute, which could become the costliest and highest-profile case in the WTO's 10-year history, may lead to higher ticket prices for airline passengers. Both sides have expressed a willingness to reach a negotiated settlement, but the communication channels remain open.

Key Takeaways:

  • The WTO has established panels to investigate alleged subsidies to Airbus and Boeing, potentially leading to a costly and high-profile dispute.
  • The United States claims that Airbus has received massive EU and member state subsidies, while the EU argues that Boeing has distorted the civil aircraft market and is being massively subsidized.
  • Washington has been seeking negotiations with the EU for over a year to end subsidies for civil aircraft, but the EU has only been willing to reduce subsidies, not eliminate them.
  • The dispute may lead to higher ticket prices for airline passengers if it results in trade restrictions or tariffs.
  • Airbus is a joint venture of EADS NV and BAE Systems PLC, with the EU making up the majority stake.
  • Boeing claims that the EU's subsidies have allowed Airbus to seize more than half of the world's civil aircraft market.

Statistics:

  • 148: The number of member countries in the World Trade Organization.
  • 80 percent: The stake held by EADS NV in Airbus.
  • 20 percent: The stake held by BAE Systems PLC in Airbus.
  • More than 50 percent: The share of the world's civil aircraft market held by Airbus, according to Boeing.
  • Over 1 year: The amount of time the United States has been seeking negotiations with the EU to end subsidies for civil aircraft.
  • May: The month in which the United States filed a complaint at the WTO about EU plans to fund aid to Airbus.

Sources:

  • The Associated Press: "EU, US Agree to WTO Panel on Airbus, Boeing"
  • Fabian Delcros, EU Spokesman: "This case will be the most complicated case that the WTO has ever handled, But the communication channels remain open."
  • Richard Mills, U.S. Trade Representative Spokesman: "We are going to the WTO because we want to see the end to launch aid and other new subsidies."
  • Raimund Raith, EU Trade Official: "This procedure will clearly show how massively Boeing is being subsidized. We have made genuine attempts to settle the case amicably instead of pursuing the path of litigation."

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