Making airplanes is one of the most prestigious things countries can do, a testimony to their technical skills, engineering prowess and aspirations on the world stage. It can be a source of national pride, but also a flashpoint. Nothing illustrates this more than the global rivalry of Boeing Co. and Airbus SE, the Coke and Pepsi of the skies.
An almost 16-year-old trade dispute is coming to a head as the U.S. and European Union prepare to launch a barrage of tariffs, subject to a further World Trade Organization ruling, on each other’s exports.
1. What’s the fight about?
State aid, the increasingly common practice of governments doling out support to key manufacturers or industries. In 2004 the U.S. lodged a WTO legal case against the EU for its member state support to Airbus. In 2011 the WTO ruled that the EU provided Airbus with billions of dollars of illegal subsidized financing that enabled Airbus to launch its wide-bodied and short-haul planes. The EU opened a parallel case against the U.S. that argued Boeing benefited from state subsidies as well as space and military contracts, which defrayed the cost of civilian aircraft development.
In 2012 the WTO determined Boeing had received at least $5.3 billion in illegal U.S. aid. The cases continued to wind their way through the WTO dispute process until 2019, when the WTO authorized the U.S. to retaliate with tariffs against $7.5 billion worth of EU exports. Due to a timing lag, the WTO won’t issue a retaliation award in the EU’s complaint about Boeing until sometime this fall. (end of excerpt)
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