The Adverse Effects of Technological Innovation under WTO Subsidy Rules

Abstract

AbstractThe WTO concluded in 2012 that subsidized aeronautical research and development (R&D) gave Boeing a head start in product development that caused serious prejudice to the interests of Airbus but later, in 2019, it could not decide how long that head start had lasted. Meanwhile, the WTO concluded in 2018 that launch aid for Airbus aircraft led to innovations that also improved later aircraft models, thereby contributing to serious prejudice to the interests of Boeing. Both conclusions relied on a causation analysis that considered the effects of technological innovation, which makes subsidies used for R&D particularly vulnerable to challenge. This novel analysis may be too broad for the actionable subsidy disciplines of the SCM Agreement.