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WTO ruling on Boeing: No reason for Europeans to rejoice

29.03.2019

The World Trade Organization (WTO) has announced its decision in the dispute over illegal subsidies for the US aircraft manufacturer Boeing. The USA has lost in the last instance before the WTO.

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Prof. Gabriel Felbermayr, President of the Kiel Institute for the World Economy and an expert on international trade, comments as follows:

"It is true that the WTO rejected the US appeal and classified the subsidies for Boeing as illegal. However, the EU and Airbus should not lament too loudly about US subsidy practices, but should above all question their own trade practices. The WTO has already identified illegal subsidies from the EU for Airbus. That shows: The aircraft industry is not a model for state industrial subsidies. We should therefore beware of offering a 'rail Airbus', an 'AI Airbus' for artificial intelligence or other support programs based on the Airbus model. This will only heat up the next subsidy race, which has high costs for the taxpayer and can cause additional damage through retaliatory measures by other countries.

Even the current subsidy practices within the EU, from agriculture to the transformation of energy systems, have so far remained completely unatoned by the WTO. The same applies to threatening gestures and trade barriers emanating from the USA or Chinese steel dumping. In this way, the WTO is losing more and more of its power to shape and assert itself. Because if everyone can do what he wants, it no longer creates legal certainty. This is particularly damaging to an export nation like Germany in important future markets such as Asia or Africa. The WTO therefore urgently needs a reform towards new and uniform subsidy rules for all its members. For the EU, this means two things: keeping the WTO coalition of 164 members together and sweeping the doorstep of one's own country before bragging aggressively about its own subsidy policy."

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