WTO Dispute Settlement Proceedings: European Support for Airbus in the Spotlight

Abstract

The bilateral WTO Agreement on Trade in Large Civil Aircraft (TLCA) of 1992 regulated the permitted levels of support for the European and American aviation industries. In October 2004, the U.S. unilaterally withdraw from the TLCA, right at the time of Boeing’s then-impending loss of market leadership. Together with the termination of the TLCA, the U.S. requested the initiation of WTO dispute settlement proceedings against the EU as well as the governments of Germany, France, Britain and Spain regarding an alleged direct and indirect subsidisation of Airbus. In response, the EC requested, on that same day, the initiation of dispute settlement proceedings regarding U.S. Federal State and local subsidies granted to the American aircraft producer Boeing, which the EC regarded as incompatible with WTO rules. What European subsidies exist for Airbus, and how extensive are they?