EU ETS and WTO confrontation raise the spectre of aviation protectionism at the worst possible time

The signs are not good for free trade in 2012. Two aviation issues came to a head this month, each raising the threat of trade sanctions flying across the Atlantic. This comes at a time when slowing growth and aggressive competition at all levels is already encouraging some governments towards a default position of market protection. The last thing the airline industry needs now is a series of trade conflicts and a reversion to protectionism.

First is the ongoing dispute over subsidies to commercial aircraft makers, which the US and Europe have fought out in two separate cases in the World Trade Organization (WTO) for more than half a decade. This came to a head with the WTO's ruling earlier this year. The second, and at the moment more politically volatile, is the European Union's contentious decision to include aviation under its Emissions Trading Scheme (EU ETS).