In an increasingly imaginary ideal world filled with rational attorneys, reasonable industry leaders and responsible politicians, the entire dispute between Airbus and Boeing at the World Trade Organization that has dragged on for 14 years and now threatens to further expand a growing rift between the EU and USA could be resolved with a handshake over a nice lunch.
Okay, maybe a few lunches.
The original point of this entire dispute – now buried beneath an A380-sized mountain of legal documents and absurdly contradictory press releases from both sides – really is not that complicated.
The EU provided below-market interest rates on repayable loans that Airbus used to help finance the A380 and A350, and Boeing, with the support of three successive US administrations, wants that to stop. Strip away all of the legal technicalities and political grandstanding, and that forms the specific cause of Boeing’s 2004 decision to urge the US government to file a trade case at the WTO.
If all of the secondary issues and retaliatory complaints are set aside, the record shows that the WTO fundamentally agrees with Boeing’s position.
So set up a lunch meeting: the EU has said already that it is willing to negotiate a solution to this dispute. Have the EU and Airbus agree to set market rates as the benchmark for financing any future commercial aircraft development. Tell Boeing to drop the lesser subsidies from the Washington state government that the WTO has also consistently opposed. Accept the ill-gotten benefits accrued by the A350 and 777X as sunk costs, and let the industry move on to more important matters.
Of course, no such lunch meeting is going to happen. No “grand bargain” on Airbus launch aid will ever be discussed by the two sides.
With the rise of the Trump administration, Boeing’s quest to make Airbus pay a financial penalty for past launch aid infractions has gained a friendly and powerful ear. Canada and Bombardier have already felt the brunt of US trade aggression, with a subsidy complaint last year ultimately gifting the CSeries to Airbus.
Meanwhile, the game of trade policy brinkmanship between Washington DC and Beijing could lead to full-scale economic war, with Boeing at risk of significant financial injury. In this new reality, Boeing now has much more to lose from its government’s aggressive trade stance than any Airbus below-market interest rate loan.