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June a busy month for U.S.-EU Trade Disputes

July 2, 2010
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In the past month, the two cases that have constantly appeared in courses on the economics of the EU and its effects on international trade with the U.S. have returned to the news.  Students have probably found themselves learning more about the international trade of bananas than they would ever have wanted to know on their own, but in May 31, 2010, the U.S. and the EU signed an agreement settling the banana dispute.   As a result, bananas grown by American companies in Latin America will no longer be subject to tariffs while bananas grown in many former European colonies were allowed into the EU duty free.   The complete text of the agreement is available here.

The second long running dispute has involved two flagships of American and European industry:  Boeing and Airbus.  This week, the World Trade Organization (WTO) announced that the EU had indeed paid illegal subsidies to Airbus.  Germany, Spain, and the UK governments had illegally given state aid to help Airbus finance the A380 superjumbo.  However, the WTO only found three of the seven cases presented by the U.S. illegal (a summary of the results is also available), but the U.S. still claimed victory.  The American response can be found at http://useu.usmission.gov/trade.html.

For students who are now worried that EU-U.S. trade will become a lot more boring, do not worry.  The EU can still appeal the WTO’s ruling.  WTO will also be announcing its ruling on the EU’s suit against Boeing later this month, which claims that the American aircraft manufacturer received illegal aid from the U.S. government.  As a result, the EU and the U.S. will have plenty to say about this dispute and scholars will still be studying the Airbus-Boeing rivalry for some time to come.

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