The deal, finally!

The Airbus-Boeing deal, atleast the bare public text, is out here. The longest WTO dispute is temporarily suspended - atleat for 5 years without any retaliation by either side. Latest reports on it are here.

What are the highlights and what does the truce tell us?

Some highlights:

1. A constant engagement at the highest level Working Group to sort out issues and thrash out more details

2. Financing for aricrafts by either side will be on market terms.

3. R & D funding to be continued on an open and transparent basis which is not specific and cause negative effects to the other side. (This requires more understanding!)

4. Application of the deal and its principles to all levels of government - national, provincial and local level. recall that many subsidies are provided by State authorities and local governments.

5. Watching activities of non-market practises of third parties (read China) that may harm their aricraft producers interests

6. Suspending any retaliatory measures for 5 years - no withdrawal of cases at the WTO but in effect calling it truce.

What can we decipher from this deal:

1. Even the most seemingly complex trade dispute with huge financial implication can be resolved with political direction

2. A larger threat makes former foes to come together for survival! The new competitor on the block are the Chinese aircraft manufacturers which can be a potent threat to both Airbus and Boeing. The US and EU allege that support for the Chinese project is largely state based and state subsidies. The need to counter this busniess threat is one of the motivating factors to come together

3. Complex, legal, trade disputes can be resolved by political intervention - a task that requires looking at the bigger picture, inetersts and future.

4. It is okay to have a duopoly situation (created by state subsidy) on market terms to counter future non-market threats!

5. Will we see more collaboration from the largest trading partners US and EU on issues with a similar threat - third party economies acting on non-market terms!

6.Subsidies have been part of the game in the aviation sector for a long time and continues to be. It seems to be ok to use them but is a challenge when others start using them too!