Tuesday, June 12, 2007

Blast from the past

Believe it or not, the Airbus/Boeing dispute is still up in front of the WTO and, according to Flight International is grinding inexorably towards a conclusion.

It came as something of a shock to realise that the last substantive piece we did on the dispute was in April 2005, when it seemed the arbitration process was on hold, only to be subsumed by the greater problems involving Airbus Industries.

But, if old soldiers never die, trade disputes never fade away. From the first reference to the WTO in October 2004, rulings are now expected which will please neither side. It seems that the findings will be that the funding mechanisms on both sides of the Atlantic are illegal under WTO regulations.

Obeying the law of unexpected consequences, however, it turns out that the ruling which eventually emerges will not only affect these two aviation giants but have ripples throughout the global industry, as far afield as Brazil and China, as their financing models are possibly suspect as well.

Since both Airbus and Boeing lodged cases with the WTO, there will be two separate rulings, the first of which, on the US case, is expected in December of this year and in June next year for the European case.

Since the US is expected to be able to declare a "win" against launch aid for Airbus, with Airbus then having to wait a further six months for its ruling, there will then be pressure for Airbus to settle early, without having to wait for the final ruling. But the European Union, says Flight International, will be wanting to wait for a "high-quality decision".

All in all, therefore, it seems nothing is going to be resolved that quickly. But, when it is, for a short period at least, the US will be able to bathe in an aura of smug self-righteousness, at the European's expense. They might as well enjoy it while they can.


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