Journal of Air Law and Commerce


In today’s ever-connected and increasingly global economy, there is a strong need for cooperation in bilateral and multilateral trade exchanges, but international trade disputes have arisen in the context of many industries, goods, and services. Over the last two decades, the European Union (EU) and the United States have been embroiled in a complicated dispute over subsidies given to their largest commercial airline manufacturers, a practice that both governments have engaged in heavily.

Increased global reliance on air travel, coupled with the dominance of few companies worldwide, has raised the stakes for maintaining innovation and profitability. Both the EU and the United States have each sought to protect their largest aircraft manufacturers with favorable government grants while at the same time condemning the other’s use of the same tactics. These subsidies on both sides of the Atlantic have been the subject of dueling complaints at the World Trade Organization (WTO) that have recently come to a head. The WTO has found that both the EU and the United States are in violation of a 1992 agreement that prohibits the use of subsidies in the aircraft manufacturing industry, findings that have paved the way for both the EU and the United States to retaliate against each other using tariffs.

This Comment seeks to explore a solution to this dispute by suggesting a new bilateral trade agreement between the two governments. The devastating effects of prolonging the dispute even more, compounded by the already heightened tensions between the two governments on the world stage, underscore the urgency of coming to a new bilateral agreement specific to civilian aircraft. Because it is unlikely that the EU and the United States will actually abandon the practice of subsidizing their respective aircraft manufacturers—especially in a time of uncertainty and turmoil in the large civilian aircraft industry—it is important that the two governments clearly define what will be acceptable moving forward and agree to adhere to such term