The World Trade Organization (WTO) announced yesterday that it will flormally investigate charges of illegal subsidies to Airbus, and the counter—charges of illegal subsidies to Boeing. We have previously written about the combat between the two jetliner makers, which involves hundreds of billions of dollars.

Both sides do indeed subsidize their aerospace industries. The WTO inquiry will take years, and may produce some extremely interesting data. Meanwhile, what amounts to a game of chicken between Europe and the United States continues. The two parties can always agree to settle "out of court" than risk massive disruption from an unfavorable ruling.

It makes a great spectator sport. But the stakes in terms of jobs, technology leadership, and the stability of the world trade system, are huge.

Hat tip: Joe Crowley

Thomas Lifson   7 21 05