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By Philippe Legrain ADD COMMENTS

Here we go again. The US government has today launched yet another salvo in its long-running conflict with the EU over aircraft subsidies, announcing that it is to file a new complaint at the WTO against European subsidies for Airbus. Before you could say "Boeing", Brussels made clear that it would hit back with its own tit-for-tat complaint. So much for the fragile truce that had held since February.

Given how politicised the Airbus-Boeing war has become on both sides of the Atlantic, it is perhaps surprising that the Bush administration did not file a complaint before the mid-term elections, in time to swing come crucial votes to the Republicans. Perhaps, then, the new WTO complaint is a response to the mood of economic populism that the Democrats were so successful at tapping into.

In any case, it is yet another headache for the WTO: a no-win case that will aggravate both sides and resolve nothing. Most likely, the WTO will find fault with both the US and the EU – and then what?

It is surely too much to hope that America and Europe will stop subsidising their national champions simply because of a slap on the wrist from the WTO. The worry is that the war in the sky could broaden into a ground war too, with each side also taking aim, for instance, at their farm subsidies.

Posted 14 Nov 2006 in Blog

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