Boeing and Airbus have been trying to outdo each other for years. Since Airbus overtook Boeing on annual orders for the first time in 1999, the US has been pressing the EU to renegotiate the 1992 subsidy deal. Airbus then overtook Boeing on overall orders in 2001 and on annual deliveries in 2003, heating up the commercial rivalry between the two.
Furthermore, despite its lead over Boeing in the global market, Airbus announced its intention to seek government loans for the development of a new model, the A350, designed to rival with Boeing’s exclusive B787 Dreamliner.
The US has warned the EU as well as the four countries involved in Airbus – France, Germany, Spain and the UK - that government spending on the A350 would violate international rules. But, after a calamitous year in 2006, due to management upheavals and lengthy delays to deliveries of its A380 planes, Airbus needs extra funding if it is to proceed with the 8-9 billion euro launch of the A350.
Airbus parent company EADS (the European Aeronautic Defence and Space Company), which holds 80% of Airbus shares, has suggested that it might turn to private investors rather than governments to raise the extra cash. And it has been suggested that Airbus could outsource as much as a quarter of the work for the A350 to in order to reduce costs.
Some observers see the US decision to follow through with its complaint to the WTO as a deliberate attempt to deal Airbus a blow as it attempts to deal with these problems.
If the EU wishes to move ahead with its own complaint, it must present its arguments to the WTO before 9 February 2007.
Together, the cases are the largest ever to go before the WTO, raising questions over whether WTO is equipped to handle it (see EurActiv 1 June 2005).
In the worst-case scenario, the EU and the US would both win, paving the way for a ferocious round of two-way sanctions that could seriously dent transatlantic trade, harming European and US economies.
