Airbus vs Boeing “Gladitorial” Subsidy Battle

European Union Trade Commissioner Peter Mandelson’s office has accused the US of starting a “gladiatorial contest” after the US announced it would challenge the EU’s increasingly egregious amount of Airbus subsidies. His office

“issued a breakdown of the support channeled to the two companies since 1992, concluding that for Airbus it was $3.7 billion while for Boeing it was much higher at $29 billion.

It said Boeing’s aid included tax breaks in its industrial homeland, Washington State, federal contracts for military and space research, support from Tokyo for building 787 wings in Japan and export subsidies declared illegal by the WTO.”

Let’s break this down, the first category of “aid” is “tax breaks”, an entirely irrelevant accusation due to the fact that Airbus received the same tax breaks in Mississippi.

The second category the EU throws on the supposed “aid” bandwagon is “federal contracts for military and space research”. Contracts (funding in return for services) are not the same thing as aid especially considering the vast majority of EU aid is soft, low-interest, “launch loans”.

The “additional support from Tokyo” due to the fact that the wings for the 787 are manufactured there is entirely acceptable. There are advantages to certain manufacturing structures and the US should not be penalized for utilizing them.

Finally, the “export subsidies declared illegal by the WTO” were dealt with back in 2000. The EU threw these old subsidy allegations in to try to lend a shred of credibility to their defense. That’s like saying that the US is immoral because of Clinton’s actions in the 1990s, yes it was wrong but, it is in the past and has been dealt with.

Now let’s take a look at the true culprit.

“Boeing estimates that Airbus has received about $15 billion worth of launch loans since 1967, which amounts to about $40 billion in subsidy benefits because of generous repayment terms.”

Airbus’ aid continues to pile up as well, they received 1/3 of the EU Spruce Goose’s (A380) development costs and are requesting an additional 1 billion euros ($1.23 billion) to launch its mid-sized A350 (direct competition for the Boeing 787).

Airbus’ accusations are baseless attempts from an almost wholly owned subsidiary of the EU to undermine competitive American industry. Maybe if the tax burden wasn’t so high across all of Europe, Airbus would not need to be carried along by government subsidies.

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