Boeing Vs Airbus: The Ongoing Wto Dispute

3643 words - 15 pages

Boeing vs Airbus: The Ongoing WTO DisputeIntroductionFor decades there has been a simmering dispute between the US and the EU over subsidies and other forms of aid for the world's two dominant makers of civil aircraft, Boeing and Airbus. Both sides accuse the other of distorting competition within the sector by receiving various forms of aid. Both Airbus and Boeing calculate that total subsidies running into the double digit billions have been unjustifiably pumped into the aircraft industry of their rival.In October 2004, the United States terminated the Agreement on Trade in Large Civil Aircraft, which it signed with the EU in 1992. At the same time, the U.S. government initiated WTO dispute settlement procedures regarding subsidies to the European aircraft industry. In response, the EU initiated similar WTO proceedings against the United States. Since then, all attempts to get the two parties back to the negotiating table have failed.This paper provides a brief commercial aircraft industry background, the market strategy of both Boeing and Airbus, and the current position of these firms on the market. It also describes WTO dispute between Airbus and Boeing and proposes potential solutions which could resolve this unique controversy.Aircraft Industry BackgroundThe US aircraft industry was traditionally one of the most successful industries of all time; hence, it shortly attracted a substantial amount of attention from policy makers. Because of its high fixed costs and the presence of the economies of scale and scope, there are extremely high entry barriers. Before European Airbus was introduced to the world market, there were three major aircraft manufacturers - Boeing, Lockheed, and McDonnell Douglas. Boeing was established in 1916 as a supplier of military airplanes by producing either fighter aircrafts or bombers for the Air Force. Shortly after WWII and the Korean War, Boeing expanded its production and started to supply commercial aircrafts to different airliners around the world By supplying airplanes to most nations, Boeing soon became the world's largest commercial aircraft manufacturer as well as the largest US exporter. On the other hand, Airbus Industrie which was established in 1970 as a direct competitor to Boeing and backed by French, German, British, and Spanish governments was rapidly gaining market share in the industry. With the help of the European government subsidies, Airbus shortly expanded its production and captured larger market shares and became Boeing's main competitor. The intense competition between those two firms lead to differentiated aircraft models and low prices for the airlines. By the mid 80s, Lockheed has virtually disappeared and McDonnell Douglas has merged with Boeing, leaving two major players in the aircraft industry: Airbus and Boeing.One of the main features of the industry is that it has extremely long investment cycles which make the industry very risky. Any aircraft manufacturer has to take into...

Find Another Essay On BOEING VS AIRBUS: THE ONGOING WTO DISPUTE

International Mediation During the Siege of the Iranian Embassy vs. Egypt and Istrael Dispute

1935 words - 8 pages with the issue, but also the delegation consisted of four experienced and high-positioned professional negotiators. The siege of the embassy continued for 444 days, and ended on 20 January 1981 after successful mediation exhibited by Algerian representatives, all the hostages were finally released. In contrast, the dispute between Egypt and Israel was ongoing for many years and there was no real urgency to solve issue. It was an initiative of newly

Boeing v. Airbus: Subsidy Dogflight Essay

1732 words - 7 pages and urged the EU to take a claim to the WTO. The US in turn, demanded that the EU end to the launch aid to Airbus on its A380 because it had already given them $3.7 billion. The US knew this was an excess of a third of the development costs on the A380 and suspected that Airbus was using the money to start working on a plane to compete with Boeing’s 787. That really angered the US and sent them on the warpath. In 2004 the two sides entered

Airbus Planning

1587 words - 7 pages the people involved. However, airbus has been involved in several rumors not very ethical. For example, in the article “Illegal Subsidy Backs Airbus” George Landrith mentions “World Trade Organization (WTO) issued a preliminary ruling that according to media reports held that European governments have provided billions of dollars in illegal subsidies to Airbus in an attempt to steal market share and U.S. jobs away from America-based Boeing.” In

Managing organizations: Boeing

7065 words - 28 pages maker Airbus, is in breach of world trade rules, while the EU says the same is true of Washington's subsidies for Boeing.While transatlantic trade disputes are nothing new, this latest dispute threatens to put all previous ones in the shade.How did this dispute start?An agreement made in 1992 between the US, that is Boeing, and the EU - Airbus has until now regulated the hostilities between them, however this has backfired because of the two

Accounting and Reporting Criteria for Boeing and Airbus

1228 words - 5 pages . Boeing and Airbus are two such companies facing these problems. This report will discuss the two companies, the accounting criteria of both, and the steps being made to a joint board and set of standards.Boeing and AirbusAt the end of the twentieth century, seven companies that manufactured passenger planes, helicopters, warbirds and missiles, satellites and spacecraft, merged to become one single enterprise- Boeing. Today, Boeing is the world's

Accounting Reporting Criteria: Boeing and Airbus

1231 words - 5 pages Every business conforms to accounting reporting criteria. In the U.S., companies follow the Financial Accounting Standards Board. Elsewhere, companies follow the International Accounting Standards Board. While both of these boards use many of the same principles, they have many differences as well. With many companies now going global, the difficulty translating these criteria is growing. Boeing and Airbus are two such companies facing these

Aircraft Manufacturing Industry

4681 words - 19 pages /bwdaily/dnflash/jan2006/nf20060117_9445_db039.htm.9 Thayer, James. (2005, December 15). Flying High: How Boeing cut short Airbus's rule as king of the skies. The Daily Standard. Retrieved February 26, 2006, from, http://www.weeklystandard.com/Content/Public/Articles/000/000/006/460nemoe.asp.10 Cage, Sam. (2006, February 2). U.S. Asks WTO to Eye New Airbus Subsidies. Forbes.com. Retrieved February 26, 2006, from, http://www.forbes.com/feeds/ap/2006/02

Boeing's Product Development Stumble

1368 words - 5 pages even surpassed Boeing for the past couple of years. Yet it is still not too late for Boeing. After all, it has survived Lockheed, Douglas, and McDonell. The company has been in the business too long for it to give up its dominant position in the aerospace industry.Boeing's CEO, Harry Stonecipher, plans to step up complaints over what he says are government subsidies given to Airbus. Boeing and Airbus have been in a long dispute over which

Investing in the Boeing Company

2498 words - 10 pages Department of Defense which constitutes illegal subsidies under the World Trade Organization rules. The recent legal dispute could cause Boeing to repay over $7.2 billion. This could potentially cause Boeing to lose profit for years to come. Everything is costing more every year. Research and development cost are on a steady rise, due to many different variables of the industry. In order to have the competitive edge over Airbus, Boeing is having

S.W.O.T. Analysis of Boeing Corp

1943 words - 8 pages aerospace company to second place behind the European company Airbus. Analysis showed that Boeing was having quality issues, expensive labor, and were not responsive to immediate demands from customers. Through a process such as SWOT a strategic direction change was proposed to allow outsourcing of many of the parts and sections of an airplane. Chuck Agne, the director for Boeing's Integrated Defense System estimates that "about 65-70% of the

Management Planning Paper

1619 words - 6 pages -Statement---Vision.htm Davies, A., (2012). Battle of the Jumbo Jets: Airbus A380 Vs. Boeing 747-8I. Retrieved December 12, 2012 from http://www.businessinsider.com/airbus-a380-v-boeing-747-8i-breakdown-2012-9?op=1 Http://www.airport-supplier.com/supplier/Boeing/ Retrieved December 17, 2012. Paur, P., (2012). NTSB urges action after engine failures in new Boeing 787, 747 Airliners. Retrieved December 12, 2012 from http://www.wired.com/autopia/2012/09

Similar Essays

Airbus Vs. Boeing Essay

750 words - 3 pages those advantages, Airbus still felt that these charges - and others related to alleged government subsidies - were false and misleading. Airbus claimed that American manufacturers had benefited from extensive research subsidies from NASA for aerospace development and large defense contracts. Also, Boeing was accused of selling its 747 expensively in order to discount the price of 767. Airbus' position with regard to the dispute over subsidies is

Airbus Vs Boeing Essay

2727 words - 11 pages Airbus and Boeing compete in manufacturing large commercial airliners. Airbus' product line includes the A330, A340, and the mammoth A380 which first flew in April 2005. In 2005, Airbus received orders for 1111 aircraft and earned revenue of €22.3 billion. Boeing's product line includes the 737, 777, and 747. In 2005, Boeing received orders for 1031 aircraft and earned revenue of $22.7 billion from sale of commercial aircraft.Until 2001

Boeing Vs Airbus Essay

799 words - 4 pages the other case, Airbus occupied 16% of the world’s existing fleet in 1992 and only 972 commercial aircraft had been delivered by the end of 1992. These included 37.2% of short-to-medium range aircrafts (A320 & A321) and 62.3% of medium-to-long range aircrafts (A300 & A310) without any long range aircrafts. As a result, Boeing had occupied 3.5 times larger aviation market and delivered approximately 7 times more aircraft than Airbus by the end of

Why Is The Dispute Settlement Body Of The Wto So Important? Does Experience Suggest That Big Players Can Ignore The Rules?

1646 words - 7 pages The Dispute Settlement mechanism of the World Trade Organisation (WTO) came into effect in 1995 with a new rules-based system enforcing all WTO members to adapt the same basic standards for global trade. However, the champions of free trade: the US (United States) and the EU (European Union) have both been found guilty of protectionism on separate accounts despite having proclaimed to be ardent protagonists of a rules-based trading system