Business

Ruling may hurt Boeing, Airbus

Airbus-Boeing ruling could end up hurting bothWASHINGTON -- However the World Trade Organization rules today on a trade dispute between Boeing and Airbus, its decision could help slowly loosen the grip the two plane makers have held on the lucrative market for commercial planes.

On the surface, the WTO will decide a 5-year-old U.S. complaint that European governments unfairly financed Airbus' climb to the No. 1 position. But the ruling may also signal how much other nations should be allowed subsidize their industries. China's aviation industry, for example, wants to compete with Boeing and Airbus for a share of the jetliner market, expected to be worth $3.2 trillion over the next 20 years.

The WTO decision isn't expected to have much immediate effect on Airbus and Boeing. A separate WTO ruling, on a claim against the U.S. from the 27-nation European Union, is expected in six months. Current projects -- jets like Boeing's 787 and Airbus's A350 -- will remain on track.

Passengers are unlikely to see changes to ticket prices as a result of the dispute, though consumers could feel some effects in other ways. They include higher prices for handbags and oranges as the EU and United States seek to penalize each other's exports after the ruling.

But in the longer term, competition could escalate from countries eager to aid their growing aircraft makers. China, India and Brazil are competing in the market for smaller regional jets and aspire to cut more deeply into the Boeing-Airbus dominance over big passenger planes.

If the WTO gives governments in the U.S. and Europe some leeway to aid their aerospace industries, it could lead other nations to do the same. China already has been accused of illegally subsidizing manufacturing sectors that it hopes to protect, such as steel producers.

"The Chinese are doing it wantonly today," said Robert Scott, senior international economist at the Economic Policy Institute in Washington.

  Comments