WTO Subsidy Battle between Boeing and Airbus Still Unclear

 - September 28, 2009, 12:39 PM

Despite the partisan claims and counter-claims on both sides of the long-running dispute over alleged subsidies between Airbus and Boeing, it remains extremely unclear whether or not the World Trade Organization (WTO) will ever definitively resolve the issue. On September 3, the WTO sent both parties its confidential interim report into Boeing’s allegations that Airbus has benefited from illegal direct state subsidies for airliner programs such as the A380. The fact that the WTO hasn’t published its findings didn’t stop the financial media and an assortment of industry analysts filling cyberspace with claims–for which they offered no concrete evidence or attributable sources–that the WTO had largely found in favor of Boeing.

By contrast, undisclosed sources supposedly close to Airbus countered that the WTO interim report had actually excluded many of Boeing’s complaints against the European airframer. For its part, the WTO has stressed that its findings on the allegations against Airbus do not stand in isolation and that before the end of the year it will issue a similar interim report on Airbus’s allegations that the U.S. government has indirectly subsidized Boeing programs.

Final reports on both sets of allegations won’t surface until some unspecified point next year. Even then, it remains far from clear whether the WTO actually carries the legal muscle to impose meaningful sanctions against any party with whom it finds fault.

Independent analyst Saj Ahmad of www.fleetbuzz.com insists the WTO will find Airbus the main culprit and that the case could undermine the business plan for the new A350 airliner, for which European governments, including those of the UK, France and Germany, have already offered repayable loans. On the other hand, he believes that the WTO does not have the regulatory teeth to impose its will, leaving the dispute spiraling out of control into an all-out transatlantic trade war.

For its part Airbus parent group EADS has called for a fresh wave of direct talks with Boeing to reach a settlement. Some commentators have confidently equated the desire for rapprochement with an acknowledgement of European guilt. But arguably, it might reflect a belated recognition that the WTO will never put to rest the matter on its own. In the meantime, aerospace firms from around the globe–but mainly the U.S. and Europe–continue to contribute to both Airbus and Boeing programs, which might beg the question as to who is actually subsidizing whom, assuming that the WTO ever gets around to officially describing any of the alleged activities as subsidies.