After long deliberations, the World Trade Organization is about to rule on a complaint that the European Union’s launch subsidies to Airbus are an unfair distortion of free trade. Apparently Airbus believes it will lose the case — and have to give up its subsidies — because the head of its North American unit is warning there will be a trade war if Washington responds to the ruling with “protectionist” measures. In other words, he wants the government to take no action even if U.S. companies have been harmed by unfair practices. And he says federal bailouts of domestic banks and auto companies show the U.S. distorts market forces too. Of course, it might be a little hard to prove that Toyota is suffering from the bailouts, considering the early results of the “cash for clunkers” program. But threatening a trade war to avoid being punished for unfair trade practices is really irresponsible in the current economic climate — especially given how restrained Washington has been in dealing with EU attacks on companies like Intel and Microsoft.
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