WTO begins formal investigation into airplane subsidies

The World Trade Organization last month began its formal investigation into alleged U.S. and European Union support for large civil aircraft.

The WTO’s first step in this probe was to set up two panels to investigate claims that Europe and the United States illegally subsidize Airbus and Boeing, respectively. According to an International Herald-Tribune report, the United States and Europe have until early August to agree on the makeup of the panels.

According to the newspaper, the probe is expected to last up to 18 months.

Despite the beginning of formal proceedings, both the United States and the European Union said they remained open to further negotiations to settle the dispute.

The United States claims that the launch aid Airbus receives from European governments to start airplane programs violates WTO rules and distorts competition because these loans are given on noncommercial terms and do not have to be repaid if an airplane is not a commercial success. Europe says the United States helps Boeing through means including military sales and federal and state tax breaks.