The World Trade Organization has been remarkably successful in lowering tariffs and other direct trade barriers around the world, but sticky issues like subsidies and discriminatory local laws, which provide indirect trade barriers, remain. One of the stickiest is the issue of airline subsidies for Boeing and Airbus, and that issue is heading for a showdown.
The real problem, though, may be that neither the United States nor the European Union can say no to its local monopolist.
The U.S. announced yesterday that it will file a request for the establishment of a &to=http:// english.pravda.ru/economics/2002/11/19/39684.html ' target=_blank>World Trade Organization dispute settlement panel to resolve a long-simmering civil aircraft dispute.
The Bush Administration, through Trade Representative Robert Portman, assailed the EU for its unwillingness to halt new subsidies for large civilian aircraft to Airbus, and said that EU member states refused to halt $1.7 billion in so-called launch aid, reports the Forbes.
According to the Scotsman, soon afterwards Washington abandoned diplomacy, rejected the olive branch and launched a full-blown legal trade case against the EU at the World Trade Organization, citing illegal aid to &to=http:// english.pravda.ru/usa/2001/11/12/20753.html ' target=_blank>Airbus.
Hours later Mr Mandelson did the same, citing illegal aid to Boeing.
No-one is publicly blaming "spin" for the new low in EU-US trade relations, but Mr Mandelson is now on the warpath, predicting the "biggest, most costly legal dispute in World Trade Organization history".