This One Could Take Years

Not at all happy at the prospect, World Trade Organization officials Wednesday began the daunting task of sifting through a dispute between the US and EU over subsidies to aircraft manufacturers Boeing and Airbus.

"It is with regret" that the EU requested a panel because "it has made genuine attempts to settle the case amicably instead of pursuing the path of litigation," the European Commission, the bloc's executive, said in a statement in Geneva. "Unfortunately, the US was not prepared to move an inch." He was quoted by Bloomberg News.

American trade officials have said as much about what they see as European intransegence.

But those words don't jive with actions by both sides -- each accusing the other of piling on complaint after complaint to their original WTO cases. It could take years for this case to run its course through the World Trade judicial system.

Judges are expected to have a prleiminary ruling on the matter in about nine months, but observers say that's just the beginning.

As ANN has reported in several stories, the dispute began when Boeing officials complained bitterly to the Bush administration about the loans Airbus receives from European governments to finance the launch of new aircraft lines. If the line succeeds, the loans are repaid. If the line doesn't succeed, however, the loans can be -- and often are -- forgiven.

The Europeans figure it this way: Not only does Boeing get cities, counties and states to compete for its manufacturing facilities by offering generous tax breaks, but NASA has poured $22 billion in grants into the Chicago-based company's coffers.

They accuse Washington of giving Boeing more than $350 million a year in tax subsidies which have, according to the EU, been twice ruled illegal by the WTO. Finally, the Europeans accuse Japan of sending over $1.6 billion in launch aid for the 787.

What will the WTO be able to do in the end? Observers aren't sure -- because this is a first for the international body. But the organization's rules and regulations "aren't built to deal with subsidies that are expected but haven't been delivered and effects that are feared but haven't happened," former US trade negotiator Charles Roh, told Bloomberg.

FMI: www.wto.org