Bridges Weekly Trade News Digest • Volume 10 • Number 6 • 22nd February 2006

Additional Panel Established In Boeing-Airbus Dispute

On 17 February, the WTO Dispute Settlement Body (DSB) established a panel in response to an additional EU complaint against the US in the mammoth transatlantic dispute over subsidies to Airbus and Boeing for the development of new aircraft. The US blocked the EU’s first request for the establishment of a panel at the DSB’s 2 February meeting (WT/DS317/5), but WTO rules prohibit countries from doing so a second time.

The original panels in the dispute were established in July 2005 (see BRIDGES Weekly, 27 July 2005). The new panel will address 13 subsidy programs that cannot be considered by the earlier panel since they were not mentioned in the EU’s original October 2004 request for consultations, the first step in the WTO dispute settlement process. The US, too, is initiating a complaint about some additional EU subsidy schemes, and filed a request for consultations on 31 January. It is likely to proceed in a similar manner.

The case is considered to be possibly the biggest dispute to be brought before the WTO. Some trade observers are questioning whether the dispute settlement system is truly prepared for such a case.

In parallel to the formal DSB process, the parties are still trying to settle the dispute amicably outside the WTO. However, on 15 February, US Trade Representative Rob Portman described prospects for the resolution of the dispute outside the WTO as "dim." Noel Foregaard, one of the chief executives of Airbus’ parent company, recently told the press that it appeared that the dispute would remain in litigation. As a result, the European Commission would "probably" seek launch aid for the development of the Airbus A350 aircraft in spite of earlier statements that none would be given before the end of 2006, in support of the ongoing negotiations.

ICTSD reporting; "Airbus and Boeing fail to make progress in dispute," FINANCIAL TIMES, 16 February 2006; "USTR Not Hopeful of Settling Dispute With EU Over Aircraft Subsidies Outside WTO," WTO REPORTER, 17 February 2006.