When bilateral is better than multilateral
Raphael Minder reports for the Financial Times that the United States and European Union have decided to settle the Boeing/Airbus dispute through bilateral talks rather than continue to seek a WTO ruling: The US and the European Union buried the hatchet on Tuesday in their trade dispute over aircraft subsidies, saying they would return to ...
Raphael Minder reports for the Financial Times that the United States and European Union have decided to settle the Boeing/Airbus dispute through bilateral talks rather than continue to seek a WTO ruling:
Raphael Minder reports for the Financial Times that the United States and European Union have decided to settle the Boeing/Airbus dispute through bilateral talks rather than continue to seek a WTO ruling:
The US and the European Union buried the hatchet on Tuesday in their trade dispute over aircraft subsidies, saying they would return to the negotiating table to reach a bilateral agreement curtailing aid to Airbus and Boeing. In October, the US and the EU launched the biggest dispute in the history of the World Trade Organisation in an effort to end what each side said were unfair subsidies to the world’s two largest aircraft makers. Brussels and Washington appear to have decided that too much was at stake to risk the prospect of a WTO ruling that could prove self-defeating for both sides. Instead, the two parties will give themselves three months to reach an agreement “to end subsidies to large civil aircraft producers in a way that establishes fair market competition for all development and production” of aircraft. Peter Mandelson, the EU’s trade commissioner, said: “When disputes arise in transatlantic trade relations we should try to solve them by dialogue and co-operation. Today’s agreement creates a positive atmosphere for more work to strengthen the economic partnership between the EU and the US, which is vital for both of us.” From the start, Mr Mandelson expressed hope that the dispute might be “kept out of the WTO net through a proper discussion.” ….The US was due to ask for the formation of a WTO panel later this week, but both sides appear to have concluded that a lengthy WTO dispute settlement procedure, which would no doubt have led to appeals, would have created huge uncertainty for the two aircraft makers at the time at a crucial time in their product development.
Click here and here for previous posts on this topic. This is a win-win-win decision. The United States and the European Union benefit from being able to craft a compromise rather than risking a WTO arbitration ruling that theoretically could have hurt both governments. Furthermore, bilateral talks permit the kind of give-and-take in bargaining that a WTO panel can’t provide. The WTO wins because it doesn’t have to deal with this case — which for many reasons is ill-suited for its dispute settlement mechanism. More importantly, the WTO keeps its reputation intact. The high stakes nature of this dispute virtually guaranteed that one or both economic great powers would not have complied with the WTO ruling. All that would have done is weaken the legitimacy and credibility of one of those rare multilateral organizations that is generally acknowledged to be effective.
Daniel W. Drezner is a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University and co-host of the Space the Nation podcast. Twitter: @dandrezner
More from Foreign Policy
Saudi-Iranian Détente Is a Wake-Up Call for America
The peace plan is a big deal—and it’s no accident that China brokered it.
The U.S.-Israel Relationship No Longer Makes Sense
If Israel and its supporters want the country to continue receiving U.S. largesse, they will need to come up with a new narrative.
Putin Is Trapped in the Sunk-Cost Fallacy of War
Moscow is grasping for meaning in a meaningless invasion.
How China’s Saudi-Iran Deal Can Serve U.S. Interests
And why there’s less to Beijing’s diplomatic breakthrough than meets the eye.
Sign up for Morning Brief
Foreign Policy’s flagship daily newsletter with what’s coming up around the world today. Delivered weekdays.
By submitting your email, you agree to the Privacy Policy and Terms of Use and to receive email correspondence from us. You may opt out at any time.
