Strategic Trade Policy and Commercial Jet Aircraft

Document Type


Department or Administrative Unit


Publication Date

Summer 1993


The production of commercial jet aircraft has been a hallmark of US. technology. Historically, U.S. firms such as Boeing, McDonnell-Douglas, and Lockheed have dominated the world aircraft market. This has led to the attempt on the part of European governments to foster aircraft companies that could compete with the U.S. firms. One such European entrant into the world aircraft market is Airbus Industrie, a consortium of four European nations. Aided by governmental subsidies, Airbus has increased its share of the world's jumbo jet aircraft market and has become the second largest manufacturer; only Boeing is larger. The upsurge of Airbus, coupled with other market forces, has driven the U.S. firm, Lockhead, out of the commercial aircraft market. The two remaining U.S. firms, Boeing and McDonnell-Douglas, have felt considerable competitive pressure.

Of major concern is the extent to which governmental subsidies have assisted Airbus in developing and manufacturing commercial jet aircraft. U.S. manufacturers have maintained that such subsidies have given Airbus considerable competitive advantage. In effect, European governments are viewed as following a “strategic trade policy” of granting subsidies to their aircraft industry to help it gain sales and profits at the expense of foreign competitors. The purpose of this article is to analyze the operation of the commercial jet aircraft industry in relation to the subsidy policies of European governments.


This article was originally published in International Trade Journal . The full-text article from the publisher can be found here.

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International Trade Journal