Monday, December 19, 2011

Boeing Airbus imbroglio - Its still in mid air

The European Union has submitted that it has complied with all the obligations as per the Dispute Settlement Panel Report. Submitting a 36 point compliance report, it stated that by taking these measures it has complied fully with all the DSB's rulings and recommendations. The United States has disputed this.

The statement of the European Union of December 1, 2011 is found here. It includes termination of MSF agreements, bringing to an end capital contributions, amendment of take off and landing fee schedule for the use of the runway extensions at Bremen airport, termination of LCA agreements and an "omnibus" point 36 - Attenuation, through the action or steps taken, with respect to the subsidies and through further intervening causes, of any causal link to the point that it no longer constitutes "'a genuine and substantial relationship of cause and effect' between the subsidies and the alleged market phenomenon".

The European Union had similarly requested a panel against the United States with respect to prohibited and actionable subsidies provided to Boeing by the United States. The matter is before the Appellate Body and a decision is expected soon.

The European Union, with respect to the Boeing dispute,  had earlier come out with documents here, here and here that allegedly spell out the subsidies Boeing gets from the US that is not consistent with the WTO obligation of the Unites States.

In a statement "Support to Boeing and Airbus : Separating the Myths from the Facts" the European Union alleges that Boeing gets huge, unjustified subsidies from NASA and the Department of Defense. Both the R&D subsidies that Boeing receives and the subsidies it receives on its military and space programmes provides considerable benefits for its civilian aircraft business.Further, the statement alleges that the the "inflated" military contracts to Boeing "cross-subsidises" its civilian programme.

In another statement a list of State and local subsidies, NASA subsidies, Department of Defense subsidies, National Institute of Standards and Technology subsidies, US Department of Labour subsidies and Federal tax incentives that Boeing has allegedly received have been provided.

The interplay of domestic policy and WTO obligations are to the fore here. A member country has no absolute freedom in this policy space

The end to the saga of allegations and counter allegations between the United States and European Union with respect to Airbus and Boeing is nowhere in sight. With the United States challenging the compliance of the European Union in the Airbus case and the Appellate Body report awaited in the Boeing case both the disputes have a long way to go.

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