The Battle of the Big Boys: A Critical Analysis of the Boeing Airbus Dispute Before the WTO

Abstract

The United States of America and the European Union have been locked in a two horse race for the control of the commercial jetliner industry since the 1980’s. This long standing feud, comparable in its own way to a US and Europe Ryder Cup match has seen its ups and downs. The market for large civil and commercial aircrafts today is experiencing a state of near duopoly. Through the instrument of mergers and acquisitions in the global aerospace industry Boeing, a US entity is fighting with Airbus, a European consortium for the right to be the undisputed champion in this market. Because of the dynamics of the aerospace industry and the stakes involved therein, this dispute has transcended from a commercial dispute between two companies into one of the most high profile trade disputes in the world. The core of this dispute involves an alleged grant of illegal subsidies by the Governments of both countries to their respective airline companies. The stakes increased manifold times when both countries sued each other at the World Trade Organization (WTO). This article aims to examine the dispute from its inception, analyze the arguments advanced by both Parties before the Panel and interpret the Panel’s decision on both the claims from a neutral perspective. This project paper is divided into three parts. Part I deals gives a brief background of the dispute with the state of the market and the players involved. Part II discusses in brief, the nature of the Subsidies and Countervailing Measures (SCM) Agreement and the WTO Dispute Settlement Understanding (DSU) the allegations put forward before the WTO Panel by both nations. Part III contains a summary of the reports passed by the Panel and the Appellate Body in addition to a critical analysis of the future implications of this decision in addition to charting the future course of action in the industry.