Friday, April 20, 2012

Boeing vs. Airbus - Settle it!

While the WTO dispute on subsidies between Airbus and Boeing seems to be far from over, this  editorial in the Seattle Times seems to suggest that the best way forward for the two aircraft carrier giants is to settle it amicably.
"The two aerospace giants have the option to negotiate a settlement on how government support, loans and subsidies are interpreted, and that is the best route, however improbable.


A negotiated settlement of the seven-year-old dispute is preferable to endless pursuit of sanctions and penalties. Truly define the grievances and establish some measure of oversight to stop the behavior that stirs WTO finger wags."
An earlier piece in 2010 in the Seattle Times by the Airbus trade adviser summarizes the irony of the WTO dispute between the two aircraft manufacturers.
"At present, there are only two firms capable of integrating and manufacturing large civil aircraft. Instead of supporting open competition, the U.S. at the behest of Boeing brings a dispute in the World Trade Organization and Europe retaliates. After five years of pouring over thousands of pages of data, and many millions of dollars in legal fees, the final result on two disputes is still awaited from an overwhelmed WTO. The total legal costs of Boeing's feud could probably fund the launch of a whole new aircraft program.
Unfortunately, these two WTO cases have enabled future competitors to look at how Boeing and Airbus funded their aircraft programs. Under WTO dispute-settlement rules, both parties had to hand over confidential information to substantiate their claims. Watching from the sidelines were "interested parties" such as the Canadians, Brazilians, Chinese, Russians and Japanese. As a result, potential subsidized competitors have their eyes on a share of the Boeing/Airbus market. Boeing and Airbus are now being forced to upgrade their respective 737 and A320 programs to remain competitive and maintain market share. Boeing's misdirected WTO litigation has enabled others to take on the duopoly.
The global alignment of economic power and technology leadership is changing. Boeing has given composite wing technology to its Japanese business partners and outsourced much of its manufacturing to others in the interest of "shareholder value" and the harvesting of its product line. One wonders, in the end, whether Boeing may have set the stage for the destruction of its strategic value to the United States."
 Signs of competition are already showing up with the Chinese aircraft manufacturer Comac partnering with Boeing.
"Boeing will work with Commercial Aircraft of China (Comac) on fuel-efficient technologies after forming a partnership with a plane maker that's mounting a challenge in the world's fastest-growing aviation market."
One would have to see if the two parties, through their respective governments decide to settle the dispute "amicably". For the moment the only thing that both aircraft manufacturers agree on is their opposition to the EU ETS scheme!

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