In fact there’s a depressing precendent for the cases announced yesterday bq. In a dispute settlement case filed at the Geneva headquarters of the WTO, the US alleged that Airbus had received a total of at least $15bn in illegal “launch aid” from the France, UK, Germany and Spain, allowing it to overtake Boeing as the world’s largest aircraft maker. … The EU Commission responded immediately by filing a counter-case charging that Boeing had received about $23bn in prohibited subsidies since 1992 in the form of research and development assistance from US government agencies. The EU also challenged pledges from Washington state to offer about $3bn in tax breaks for Boeing production of its new 7E7 jet. (“Financial Times”:http://www.ft.com/cms/s/ea4b2a3a-179b-11d9-9ac5-00000e2511c8.html) The Canadian and Brazilian aircraft industries went head-to-head in a “legal battle”:http://www.wto.org/english/tratop_e/dispu_e/dispu_subjects_index_e.htm#bkmk2 over subsidies to their commuter airliner industries for many years, with the result that both were found to be wrongdoers in one measure or another. The US-EU battle now enters a 60 day period of consultations mandated by the WTO disputes timetable that, frequently these days, is abortive. They should hope not in this case. The WTO dispute rules prefer settlement between the parties, particularly in a case such as this where the nature of the dispute calls for a political rather than legal reconciliation. As in municipal law, not all disputes are appropriate for WTO adjudication: # The regulatory and policy facts related to the aircraft supports are extremely complex; adjudication of them will probably require a tortured exegesis of the rather simple WTO rules that won’t satisfy anyone
# There are compounded legal complications related to a prior, un-resolved, dispute (part of the EU case is that the USA is subsidizing Boeing to the value of USD200 million each year through a still-uncompliant successor to the disputed “FSC legislation”:http://www.inquit.com/article/6/tax-breaks-fracture-fsc-revision )
# The commercial interests are so large that the ‘losing’ side—whose obligation will be only to bring its laws into conformity with the WTO agreements breached—will probably make changes that do not, in the end, remove the commercial advantages provided by the current laws In other words, this is a case where a WTO ruling, obtained even after a massively difficult adjudication, would probably not make any difference to the situation on the ground. The US and EU should work very hard to settle this during the consultation phase.
Peter Gallagher is student of piano and photography. He was formerly a senior trade official of the Australian government. For some years after leaving government, he consulted to international organizations, governments and business groups on trade and public policy.
He teaches graduate classes at the University of Adelaide on trade research methods and the role of firms in trade and growth and tweets trade (and other) stuff from @pwgallagher