Airbus and the politics of civil aircraft construction: Conflict or cooperation?

Does Airbus symbolize dispute between the United States and the European Community, or a brilliant European collaboration?

Airbus began operation in 1970 and throughout the 1980s caused increasing concern for American government and industry officials. Bilateral EC-US trade diplomacy over Airbus resolved the dispute in 1992 with the signing of an agreement governing international trade in civilian aerospace.

Yet the twenty-year dispute in the civil aircraft sector did not escalate to the level of trade conflict involving the use of protectionist measures such as tariffs and duties. Indeed, after a decade of difficult diplomacy, the US and the EC not only avoided an overt trade war in aircraft, but succeeded in crafting an international managed trade regime for the sector. Conflict was in fact avoided and apart from Airbus being a European collaboration, it was in a sense, an international cooperation.

Airbus Industrie is a European consortium comprising four companies: British Aerospace, Aerospatiale, Deutsche Aerospace (DASA) and Construcciones Aeronauticas S.A. (CASA). Founded in 1970, its purpose was to restore Europe's position in the civil aerospace market by offering jet airliners in competition with the three major American airframe builders: Lockheed, McDonnellDouglas (MDC) and Boeing. Airbus has been a spectacular success in this regard; by 1992, it had captured 30 per cent of the world market for large (over 100 seats) airliners after 20 years of operation.

The manner by which Airbus achieved this was not without controversy. Airbus is not a consortium of private aerospace firms. Two of the firms, (Aerospatiale and CASA) are state-owned and each of the partner governments has representatives on the Airbus Intergovernmental Committee. In the close relationship between government and industry, Airbus functions much more like a state-owned enterprise than a private corporation. Each of the European firms and states had a significant interest in seeing Airbus succeed. The industry needed Airbus because previous European efforts to develop planes on a national basis failed.

European states needed Airbus because collaboration was the only way to ensure that their national aerospace industries remained internationally competitive. The partner governments have made available to their firms a variety of industrial supports. This included the provision of launch aid to assist in the development and production as well as export credit in support of Airbus sales.

From the European perspective, Airbus is an entirely appropriate response to American dominance of the civil aircraft sector.

Airbus was valued not merely in its own right as an exporter of high-technology goods, but as a technology driver. Airbus has helped develop and strengthen the European aerospace sector generally by providing a customer for many European subcontractors. It has also become a powerful symbol of what can be achieved by European political and economic cooperation. European officials also point out that Airbus operates with a strong commercial ethic and has developed aircraft models, only after determining that the market could support the effort.

The United States saw the matter rather differently. The American industry and government viewed Airbus as an example of the unfair and predatory trade and industrial policies pursued by America's trading partners that were damaging US industry. Civilian aerospace is one of the success stories of the post-war American economy and protecting it from European competition was an important goal for US policymakers.

The US industry was not merely the world's strongest, it was utterly dominant with US firms controlling over 80 per cent of the market by 1970. Yet, the United States consistently refrained from taking strong action to stop Airbus eroding this position. Both the US and the EC had powerful economic and political reasons for defending or promoting their civil aerospace industries.

However, these efforts never included abrogation of existing trade agreements or the use of unilateral protectionist measures. Indeed, on the whole the world trade in aerospace is more regulated - and arguably more open - than ever before. Tariffs have been removed and a series of international agreements have set out rules on matters such as provision of subsidies and government procurement.

The apparently successful efforts to resist protectionism (and the dangers of trade war that result) suggest that an analysis of the Airbus dispute can make a contribution to our understanding of international cooperation.

The trade dispute simmered for over a decade and featured periodic negotiations on the matters of subsidy and export finance. In many ways it has concentrated the minds of everyone involved in the industry and enhanced its standing.

The role of aviation-database. 

Aerospace industry contacts, suppliers and subcontractors  to Airbus, Lockheed, McDonnellDouglas and Boeing all, are gathered together in one resource at www.aviation-database.com , a classified index of aircraft component manufacturers and suppliers worldwide.