Of Course You Know, Doc, This Means War
It was just six weeks ago that EU Trade Commissioner Peter
Mandelson declared his version of peace in our time -- a pledge
that the union's dispute with the US over airplane manufacturing
subsidies would be resolved without a battle in open trade court.
Now, the US has filed a World Trade Organization suit against the
EU, alleging unfair subsidies to Airbus. Mandelson, abandoning
hopes of settling without launching a trade war, has filed a
countersuit, accusing local governments in the States of, in
effect, subsidizing Boeing.
Of course you know, this means war. And it will be the biggest
trade war the WTO has ever seen.
Mandelson told reporters Tuesday that Boeing was "instrumental
in pressuring the US government to file the WTO suit, "not because
it fears subsidies, but because it fears competition. "I can assure
you Europe's interests will be fully defended." Mandelson was
quoted by Bloomberg News.
The first shots in the transcontinental trade war were fired
after Airbus, true to its word, asked European governments for $1.7
billion in financial aid to help it launch the A350, a direct
competitor to Boeing's heavy-selling 787. After the original US complaint was filed in
October, negotiations broke down last month. Even then, Mandelson
vowed there would be no lawsuit.
But over the weekend, the EU reportedly offered to cut the
subsidies Airbus requested by 30-percent. That was apparently seen
in Washington as a dare to file. US officials did just that.
Mandelson told reporters the Bush administration timed its
filing so that "Boeing can rain on Airbus's parade at the Paris air
show," which starts June 13. "The WTO has better things to do with
its time than referee this grudge fight" with "quite destructive
"We would rather not have to go back to the WTO," US Trade
Representative Rob Portman said in a statement Monday, also quoted
by Bloomberg. "But the EU's insistence on moving forward with new
launch aid is forcing our hand."
Ironically, there was one point on which both warring sides
might agree: The WTO court dispute will take years to litigate and
cost millions of dollars in attorneys' fees. "At that stage, after
all that expense of time, effort and money, we have to come back
and negotiate a way forward, just as we should now," Mandelson
said. And all the while, he conceded, Airbus can obtain aid "with
impunity because launch investment is not a subsidy; governments
are making a profit."