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Reactions to WTO's finding on subsidies

A World Trade Organization panel's finding that the European aviation company Airbus had benefited from years of unfair subsidies is, on its surface, a victory for Boeing and the United States in their six-year quest to force Airbus to compete on a level playing field. Yet it also lays the groundwork for an important precedent that could ultimately help both firms in future disputes against new state-subsidized competitors.

Although the panel called on France, Germany, Spain and Britain to withdraw the offending subsidies within 90 days, it may take years for the WTO to reach a final decision and come up with a way to enforce it. Complicating matters is Europe's WTO complaint against subsidies allegedly given to Boeing by the U.S. government (in the form of research contracts from NASA and the Defense Department) and the state of Washington (in the form of tax breaks).

The issues raised by both cases are important, and together they should help clarify what governments can and cannot do to support the aviation industry. Tougher limits on subsidies would assist both Boeing and Airbus — they can raise capital relatively cheaply to develop new products without taxpayers' help, while their competitors in developing nations are more likely to depend on governmental subsidies. That's no guarantee that China and other developing countries will heed the WTO, but it's a start. _ Los Angeles Times

This case is crucial to U.S. interests. If not settled, it should be taken into account when the Pentagon awards contracts for Air Force tanker airplanes.

Europe should also be reminded that its long-run interest is not so different from ours. At the moment, the large commercial-jet market is divided between Airbus and Boeing. But these two face the threat of competitors from China, Russia and Brazil — countries that will be tempted to elbow their way into the market by cheating.

The United States and Europe need to present a common front in support of WTO rules — and that means playing by the rules themselves.— Seattle Times

What the WTO panel has ruled, at least six years after the original U.S. complaint was lodged, is that Boeing at most lost some overseas market share and perhaps jobs because of illegal export subsidies for Airbus. But the panel has not ruled "launch aid" from France, Germany, Spain and the United Kingdom, the four governments involved, illegal in itself. Much of it, several billions of euros, has, after all, been repaid — with interest. Nor has the WTO upheld U.S. complaints that this aid enabled Airbus to undercut Boeing prices.— David Gow, EuropeanVoice.com

If Airbus doesn't suffer any consequences, then Brazil, Canada, Japan, China and Russia could unfairly threaten Boeing's market share. At that point, the U.S. government would have to choose whether to start a trade war, subsidize Boeing or watch it lose out to global competitors. —Spokane (Wash.) Spokesman-Review

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