Boeing Dispute Case Study

Introduction

In 2004, as competition in the already highly competitive industry of commercial aircraft escalated between Airbus & Boeing, each with a revolutionary new aircraft under development, the dispute between the European Communities (EC) and the United States over subsidies given to the respective organizations came to a head. On October 6, 2004, the United States unilaterally renounced a trade agreement between the two parties and initiated the World Trade Organization (WTO) dispute resolution process, alleging that the EC violated international trade agreements, primarily by giving launch aid to Airbus. That same day, the EC filed a separate complaint in the WTO against the United States, alleging that Boeing received prohibited government subsidies in the form of tax breaks and preferential government contracts. At that time, the dispute was expected to be the biggest and most expensive ever heard under the WTO Dispute Settlement Understanding (DSU).

The Aircraft Manufacturing Industry

An increase in the number of passengers

The main reason being that Airbus was actually a combination of various national manufacturers and with the emergence of European Union as a common entity Airbus got lot of undue benefits due to its position and power.

There were three agreements which changed a lot of things in the Light Commercial Aircraft (LCA) industry and also affected the Airbus-Boeing dispute. These three agreements were the GATT Tokyo round which occurred in 1979 which created subsidise code and also agreement regarding the trade of civil aircraft, second was in 1992 where there was a bilateral agreement between EC and United States and third was the Uruguay round in which WTO was created, which included agreement on subsidies and