Airbus and Boeing Contest Latest Subsidy Ruling

 - May 16, 2011, 8:21 AM

Some sort of negotiated settlement would appear the best outcome for which either protagonist can hope in the interminable dispute between Airbus and Boeing over alleged subsidies for airliner developments that is supposedly being resolved by the World Trade Organization (WTO). Once again, the aerospace industry has been asked to believe that both sides are 100 percent in the right after yet another leaked ruling from the WTO on January 31–this one supposedly supporting Airbus’s claims that Boeing has enjoyed an unfair advantage from government subsidies. But since the initial details of the WTO’s findings only ever seem to find their way through osmosis to insiders with strongly vested interests, it is difficult to understand how the rest of us can form an independent judgment.

Supposedly, the ruling itself will be issued publicly in “a few weeks,” after it has been translated from English. If nothing else, this will make it easier for Russia’s Sukhoi, China’s Comac and Japan’s Mitsubishi to reflect on how they could take advantage of the way Airbus and Boeing have allowed themselves to be distracted by years of circular arguments. Others might, in turn, reflect on whether the sluggish WTO will ever turn its attention to the government support that these emerging rivals have surely enjoyed as they seek to break into aerospace’s top tier.

For what it’s worth, Airbus claims the WTO has ruled that Boeing could not have launched the 787 Dreamliner widebody without illegal subsidies to the tune of $5 billion and that it is due to receive $2 billion more in illegal subsidies–mainly channeled through the U.S. Department of Defense and NASA.

Not true, Boeing responded, arguing that the WTO has in fact rejected “the majority of Europe’s claims.” It insists that the officially undisclosed ruling identifies no more than $2.6 billion in unacceptable subsidies and that these are dwarfed by the $20 billion in illegal funds to Airbus, which it says were identified by the WTO in an earlier ruling in June 2010. The outcome of this ruling was an order for Airbus to repay the funds in question, but this is already subject to appeal. Attorneys acting for both Boeing and Airbus are already busying themselves with appeals over other aspects of earlier rulings and it looks like their workload is about to increase if the findings leaked on January 31 prove correct.

Even now the warring parties could opt to start haggling instead of heckling, and could yet negotiate some sort of compromise settlement to the multifaceted claims and counterclaims they have put before the WTO.