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7/20/05

JTW Comment - Who Will Win the US-EU Trade War?

JTW Comment

Who Will Win the US-EU Trade War?

Who's going to win the dispute between Brussels and Washington over Boeing and Airbus? The most likely answer is: neither. The World Trade Organisation (WTO) will take about fifteen months to look at what are two separate complaints. At the end of it, the best bet is that it will point the finger at both governments. The WTO's panels of lawyers and economists don't have to adjudicate between Europe and the United States as though they were involved in a wrestling match with one winner. Rather, there are two separate cases, with two possible losers or winners. The WTO will analyse the merit of the European Commission's allegations that Boeing gets unfair support in the form of generous help by the authorities in Washington State where it makes its planes, further Japanese subsidies from Boeing's Japanese suppliers and favourable treatment from the Pentagon. And it will determine the merits of the American allegation that European taxpayers' support of Airbus projects is an out-and-out unfair state subsidy. If the WTO does decide against both governments, they will each be told to stop breaking the rules. And if they fail to desist, then retaliatory sanctions will be allowed in line with a scale set by the WTO.

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