Airbus's admission that the World Trade Organisation has detected subsidies in past loans from European governments is undoubtedly a success for Boeing. But the champagne will probably stay on ice, for now.
For one thing, it's entirely possible that Boeing will be on the wrong end of a very similar verdict in the summer, when the WTO is due to rule on the European Union's counterclaims about US subsidisation of Boeing. Either way, it is likely to be years before the ruling against Airbus could translate into sanctions via a nightmare of appeals and follow-on arbitration.
Hanging over all this is the reality that goalposts have shifted since the WTO dispute was set in train by Harry Stonecipher, then chief of Boeing, in 2004. Amid the financial crisis, concerns about fairness of competition took a backseat as governments stepped in to secure their ailing economies. The USA - plaintiff in the Airbus-related WTO dispute - was no exception, supplying billions in bailout money to its automotive and banking industries. When it comes to state aid, the moral high ground is increasingly perilous terrain for any nation.
Meanwhile, the glacial progress of the WTO dispute has allowed the Airbus A350 XWB and even the Boeing 787 programmes to advance significantly. At best, the forward-looking obligations that could eventually arise from the WTO's recommendations might apply to the next generation of narrowbodies. Even then, circumvention seems easy to achieve. State contributions to defence programmes improve the recipient's cash position just as well as those to commercial programmes, but would require separate WTO investigations. If, for example, European governments wish to prop up Airbus parent EADS, they can do so via the beleaguered A400M military transport.
The time lag has also created a huge irony. The A380, a focus of the USA's WTO case, has failed to meet sales expectations and remains firmly in the red. As Richard Aboulafia, vice-president of analysis at the Teal Group, puts it: "If the A380 has hurt anybody, it was definitely Airbus." A WTO finding that A380 subsidies provided no material injury to US interests can only be a bittersweet victory for the aircraft's manufacturer.
Ultimately, it's hard to argue with Airbus's contention that bilateral negotiations are required to settle the row. For more than a decade, the 1992 large civil aircraft agreement authorised support to manufacturers. A successor agreement might be a quicker and more efficacious solution than endless litigation.
Source: Flight International
