No Sign of Landing: Airbus, Boeing, the WTO, and the Expanding Large Civil Aircraft Battle

Abstract

The United States and the European Union have been in a long-term feud concerning subsidies in the Large Civil Aircraft industries since the late 80’s. Much of the disagreements have to do with either party believing that the other is funding their respective companies (Boeing & Airbus) with illegal subsidies, or with a subsidy that creates an adverse effect and thus still is a violation of the WTO Agreement on Subsidies and Countervailing Measures. A large part of the subsidies problem stems from the failure of the Large Civil Aircraft companies and their respective WTO members to come up with a subsidies agreement for aircraft which would alleviate the burden created by trying to govern the industry based on the SCM Agreement. However, without this change, each government is still restricted by the SCM Agreement, thus they continue to try to find ways to subsidize their industries while still staying in bounds of the agreement. In 2014 the European Union filed a complaint with the WTO alleging that the United States had violated the SCM Agreement with Washington State’s Senate Bill 5952, which they believe created a contingency for domestic over imported goods, thus harming Airbus and the European Union. In September 2017, the Appellate Body reversed the previous Panel decision, and sided with the United States. More importantly, as this Article argues, the Appellate Body seemingly made it more challenging to find Article 3.1b violations, as well as potentially creating an incentive for Large Civil Aircraft companies and their Governments to use site based subsidies. This Article examines the new Appellate Body Report and its impact on site based incentives. Furthermore, this Article includes potential future actions in the LCA industry due to the Appellate Body Report.