Making Sense of the Arbitrator’s Ruling in DS 316 EC and Certain Member States- Measures Affecting Trade in Large Civil Aircraft (Article 22.6-EC) A Jigsaw Puzzle with (at Least) a Couple Missing Pieces
26 Pages Posted: 9 Sep 2020
Date Written: July 2020
“The U.S. won a $7.5 Billion award from the World Trade Organization against the European Union, who has for many years treated the USA very badly on Trade due to Tariffs, Trade Barriers, and more. This case going on for years, a nice victory”, tweeted President Trump’s on October 3, 2019. The United States (US) won not only the highest amount of retaliation ever adjudicated in the history of the WTO but also an ongoing right to retaliate on an annual basis until such time as the EU had complied by either removing the subsidies it granted Airbus or somehow neutralizing their adverse effects on Boeing. In light of the facts of the case, this ruling has two major shortcomings. First, in sharp contrast with the statutory language and practice until now, the Arbitrator effectively introduced a permanent liability rule into the WTO system through the backdoor. Second, given the way the decision and the associated award is written, it is simply impossible for the EU to comply because (a) the contested subsidies are no longer in existence and (b) no guidance has been provided on how the EU might go about removing their effects if it sought to achieve compliance. Thus, in all likelihood, the EU is saddled with a ruling that obligates it to cough up an annual sum of $7.5 billion USD for an indefinite time period.
Keywords: Airbus; Retaliation; WTO
JEL Classification: K40
Suggested Citation: Suggested Citation