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The Adverse Effects of Technological Innovation under WTO Subsidy Rules

Published online by Cambridge University Press:  19 August 2019

Matthew Kennedy Open the ORCID record for Matthew Kennedy [Opens in a new window]
Matthew Kennedy*
Affiliation:
University of International Business and Economics, Beijing
*
*Email: matthew.kennedy@uibe.edu.cn.
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Abstract

The 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.

Keywords

innovationresearch and development (R&D)subsidiesSCM AgreementaircraftAirbusBoeingWTO
Type
Research Article
Information
World Trade Review , Volume 19 , Issue 4 , October 2020 , pp. 511 - 530
Copyright
Copyright © Matthew Kennedy 2019

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