Dispute process could rumble on for years as USA and Europe both claim to desire a negotiated settlement
With both sides still claiming they want a negotiated settlement of the Airbus/Boeing subsidies spat, the USA and Europe last week launched rival World Trade Organisation dispute procedures that could take at least two years to reach a conclusion.
The US government requested the establishment of a WTO dispute settlement panel on 31 May after rejecting a European Union offer to reduce launch aid for the Airbus A350, reportedly by 30%, as a first step towards phasing out subsidies. The EU retaliated by requesting its own WTO panel to investigate subsidies to Boeing.
"This will undoubtedly be the biggest, most difficult and costliest procedure that the WTO has had to deal with in its history," says European trade commissioner Peter Mandelson. "And even then, we will not be sure of a clear-cut decision, which will probably mean that we [Europe and the USA] will have to come to some sort of deal."
US Trade Representative (USTR) Rob Portman says the USA launched its WTO case because "at this point, the EU is no longer willing to hold off on launch aid, and has only proposed to reduce subsidies, not end them". Airbus is expected to launch the A350 at next week's Paris air show.
The USA will seek to prove that launch aid and other government support for Airbus is either actionable or prohibited under WTO subsidies rules. Subsidies are actionable when they cause adverse effects and are prohibited when they are export contingent, says the USTR, arguing that launch aid has allowed Airbus to build market share at Boeing's expense.
The USTR will challenge the $1.7 billion in launch aid sought for the A350, as well as government support for previous Airbus models, and demand repayment of the $3.7 billion in launch aid for the A380. National government approval of the A350 loans, on hold while Europe and the USA sought a negotiated settlement, is now likely. But there is still time to negotiate a deal, says the USA.
By requesting a panel, the USTR says, the USA "is providing time for the EU to reconsider its plans to provide new subsidies" and recommit to the January agreement for negotiations. That agreement called for the two sides to negotiate an end to subsidies, not a reduction, says the USTR.
Boeing supports the decision to seek a WTO panel, but says a negotiated settlement is preferable. Airbus shareholders EADS and BAE Systems also called for a negotiated solution.
GRAHAM WARWICK/WASHINGTON DC
Source: Flight International
