Tuesday, March 13, 2012

Subsidies, Boeing and WTO - It goes on

The Appellate Body (AB) of the WTO made public its report on subsidies given to Boeing by the United States. While the 576 page judgement of the three member AB will require detailed analysis, the key finding of the AB is here:
"1351. We realize that, after more than five years of panel proceedings and eleven months of appellate review, a number of issues remain unresolved in this dispute.  Some may consider that this is not an entirely satisfactory outcome.  Our mandate under Article 17 of the DSU does not permit us to engage in fact-finding.  However, wherever we have found that there are sufficient factual findings by the Panel or undisputed facts to complete the analysis, we have done so with a view to fostering the prompt settlement of this dispute in accordance with Article 3.3 of the DSU. 
1352. The Appellate Body recommends that the DSB request the United States to bring its measures, found in this Report, and in the Panel Report as modified by this Report, to be inconsistent with the  SCM Agreement, into conformity with its obligations under that Agreement.  More specifically, having regard to the recommendation made by the Panel in paragraph 8.9 of its Report and the provisions of Article 7.8 of the  SCM Agreement, the Appellate Body recommends that the United States take appropriate steps to remove the adverse effects found to have been caused by its use of subsidies, or to withdraw those subsidies."
With both sides claiming victory as blogged here, this promises to be a long fight regarding the violation of the SCM Agreement. Just as the Airbus case saw the EU submit compliance and the U.S. disputing it, there is no doubt that this dispute will go that way. The U.S will submit to the WTO the appropriate steps it has taken to remove the subsidies, while the EU will dispute its effectiveness. Is the solution a political compromise or will the threat of a third competitor (China) end this largest trade dispute?

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