Loop the loop subsidies


airbusThe fight between Boeing and Airbus has taken another loop-the-loop moment. Accusing each other receiving subsides from government, they have taken each other to battlefield of the World Trade Organization (WTO) in dismay of having an ‘unfair’ advantage in the air.

As a fan of the free market, I do not like government intervention. Market competition forces firms to experiment with ways to produce goods and services in the most efficient way. Interfering with this process leads to market inefficiencies and causes competition to decline. Government subsides are on this list of do-nots.

Boeing has received at least $5.3 billion in subsidies from Washington, which has been declared illegal by the World Trade Organization. In one of the most complex cases ever to face the WTO, it was been disclosed that some of the subsidy that Boeing received was for research and development from NASA.

Before this, the US complained to the WTO that Airbus took subsidies from the EU and it had unfair advantage. The EU believe that Boeing has received even more illegal subsides from 1989-2006, totaling $19.1 billion.

This latest dispute has been on running for over six years but I think that there are a number of double standards from both sides of the flight war. The US complained that the EU was helping out Airbus and at the same time the US was helping Boeing. The EU has then counter-complained and we are at the stage of the dispute of where both parties have been found to have broken trading rules.

Both governments need to step back and let the firms compete without help at all. Competition between them should be fair in the sense of governments not handing taxpayers money to them. Though it does not like for the foreseeable future that the Boeing vs. Airbus subsidy war is going to end, the losers are the taxpayers in both the US and the EU whose money is being poured down the drain for the sake of their governments’ sense of pride.