Airbus and Boeing

Airbus thinks Boeing is being subsidised, and that this is illegal under WTO agreements. Boeing thinks Airbus is being subsidised and that this is illegal under WTO agreements.

Both companies are, of course, completely right.

Unfortunately neither US Trade Representative Rob Portman nor EU Trade Commissioner Peter Mandelson has taken the moral or intellectual high ground on this issue, which would be to say: "You are quite right. I will sort it out immediately. Please do the same at your end".

Now, at last, the WTO is to mediate. I fear a mushy compromise, under which both Europe and America will be permitted to continue subsidising (at a bigger cost to their own taxpayers and consumers than to foreigners) for several years to come, in exchange for vague commitments to phasing out subsidies at some future date.

I hope I am wrong. I hope the WTO will find against the subsidies on both sides of the Atlantic, and both sides will immediately back down. I hope that having sorted out this problem, the WTO will turn its attention to the much more invidious European and American subsidies to textiles and agriculture, which promote poverty in the West and starvation throughout the developing world.

Not very likely, though, is it?

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