Airbus vs Boeing: The Subsidy Wars
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Code : COM0100
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Region : USA Europe
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Subsidies in EU and USA: A Long Drawn Duel? Specific industries in the US and the EU have been traditionally subsidized. US has been subsidizing its industries in the form of cash handouts, allowances etc.According to The Economist, the steel industry inUS is estimated to have benefited to the tune of $30 billion through quotas, tariffs and other forms of subsidies between 1976 and 2002. European countries have similarly been providing subsidies to their steel industries... Airbus vs Boeing: The "Subsidy" Wars The development of large commercial aircraft involves huge risks with high initial R&D spending which was $10 billion for 787, developed by Boeing and $12 billion for development of super jumbo model A380, developed by Airbus. This typically requires around 10 years of production and 500 to 600 planes of a model to be produced for reaching breakeven. According to The Economist "...big civil-airliner projects are so expensive and risky that, without government support, they would never be financed at all"... The Road ahead: Free Trade? Economists believe that this dispute would bring to test the ability of the WTO in handling disputes between the two most powerful global economic blocs. For both Europe and US, Airbus and Boeing are strategic industries wherein lie their national interests. The success of both suits and the threat of countervailing import duties on new Airbus and Boeing planes "would cast a pall over the aviation industry and could even ignite a disastrous transatlantic trade war"... |
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