Expert: This One Won't Be Solved Through Settlement
Now that Boeing CEO Harry Stonecipher has reportedly pushed the
Bush administration into filing a complaint with the World Trade
Organization about Airbus government subsidies, it looks like the
nation's top aerospace manufacturer will have to settle down for
the long haul.
"I don't think this one will get solved by negotiating," said
Marc Busch, a WTO specialist at Queen's School of Business in
Kingston, Ontario. He was quoted by the Chicago Tribune.
Last month, the US unilaterally pulled out of a 1992 trade deal
with Europe that covered things like aircraft manufacturer
subsidies. It allowed for below-market government "launch" loans,
provided Airbus repaid the loans in time.
But over the years, Boeing has been losing market share to
Airbus, a fact that might bolster the US case at the World Trade
Organization. Still, some trade experts, like Daniel Griswold at
the Cato Institute, say Stonecipher's gambit is "like reaching for
a two-by-four when what you need is a scalpel."
The US says Airbus has accepted $15 billion in illegal
subsidies. Airbus has hit back with a 5.08 cm x 10.16 cm board of
its own, accusing Boeing of accepting $23 billion in subsidies.
The Heart Of The Matter
But what really lies at the heart of the dispute could well be
two specific aircraft -- Boeing's 7E7 and Airbus's contemplated
competitor in that class of mid-sized, fuel-efficient aircraft, the
A350. The Airbus model would be launched with the help of, you
guessed it, government subsidies.
"That's the beef Boeing has," said Theodore Austell, Boeing's
vice president of international policy in an interview with the
Tribune. "To think that in a go-forward posture they will once
again avail themselves to monies from the government is a big
The US proposes cutting off all subsidies -- a move that would
allow Airbus to keep the government money it's already received to
develop its behemoth A380. That's a big deal for the Europeans,
because if the WTO rules against Airbus, the company will have to
forego all aid for the double-decker 747 replacement. But there are
hints from both sides of the Atlantic that this dispute has already
gone way too far for a peaceful settlement.