Dog-fight

2 October 2007 By BVJournalist

The US and EU look set to emerge with pyrrhic victories in their titfortat disputes over $34bn in alleged illegal subsidies to Boeing and Airbus. Although the WTO will declare both sides guilty, it s emerging Brazilian, Russian, Canadian, and Chinese rivals will win out.

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The US and the EU presented evidence last week for the first time to the World Trade Organisation in the dispute over subsidies to Boeing and Airbus.

Both sides argued that the other gives illegal support to their respective national champions. Various governmentfunded research contracts and tax breaks to Boeing amounted to $16.8 billion, the EU charged. Airbus has received $16.7 billion in government launch aid since 1970, the US countered.

Subsidies allowed Boeing to cut prices and develop the 787 Dreamliner, the EU said, adding that Airbus lost an astounding $27bn between 2004 and 2006 in lost sales and by being forced to lower prices. Subsidies to Airbus forced Lockheed and McDonnell Douglas out of the civil aviation business, the US retorted.

An initial ruling in US case against Airbus is expected by the end of this year. A ruling of the EU case against Boeing will come next year. Both sides then could appeal.

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