The World Trade Organization faces its biggest test ever, as the United States and European Union square off over the commercial jetliner market.
U.S., EU declare biggest trade war (Chicago Tribune)
The U.S. and the European Union launched the largest trade war ever Tuesday, pitting the interests of two giant aircraftmakers as they vie for control of the lucrative market for commercial jetliners. The U.S. launched its case Tuesday at the World Trade Organization in the face of mounting evidence that European governments plan to provide as much as $1.7 billion in low-interest loans to help Airbus launch its newest plane, the A350. The EU immediately retaliated, claiming Boeing’s 787 Dreamliner has received more than $7 billion in tax incentives and infrastructure support.
However, the EU left out of its case an issue that Airbus has complained loudly about: $1.6 billion in subsidies expected to come from Japan to support Japanese suppliers that will build the wing section of the 787. Trade experts speculated the EU backed away because it feared opening the issue, since many European suppliers receive government support.
The huge dispute between two of the world’s largest trading partners threatens to disrupt relations between the U.S. and EU at a time when they need to work together to advance their mutual interests. They are seeking to complete the latest round of World Trade Organization negotiations and deal with the sharp rise in Chinese textile imports, the theft of intellectual property and other concerns.
It makes little sense to expand WTO until we come to terms with the existing requirements. While the United States is naturally less inclined to government subsidy and protectionism than its more socialistic counterparts in Europe, the fact of the matter is that all governments protect key industries, especially those with military-national security implications. These issues need to be resolved before going further.
