Sir, I strongly support the thrust of your editorial on the Boeing/Airbus dispute ("Airing Differences", October 7). You are right when you argue that the World Trade Organization "is badly equipped to handle" this complicated and highly charged political confrontation. I would add, however, several facts and issues that should frame the debate.

First, whatever the political motives on both sides, the United States is correct in arguing that the competitive conditions in manufacturing large-body commercial aircraft have changed dramatically since 1992 when the original U.S.-European Union agreement was constructed. At the time Airbus had about 30 percent of the world market and Boeing and McDonnell-Douglas 70 percent. Today Airbus has more than 50 percent of worldwide sales and 60 percent of future orders. There are no "infant" industries involved here.

Second, the most direct and egregious government intervention is the direct launch aid granted by the EU for new aircraft. Whether Boeing is correct in the exact amount (alleged Dollars 15bn) remains to be determined; but the total is substantial and has direct bearing on price competitiveness. But if this is the case it is also true that all potential forms of subsidy should be placed on the table. In the original agreement, provision was made for limitation on alleged research and development subsidies and indirect support from military contracts. Airbus now argues that Boeing has received some Dollars 23bn in such subsidies since 1992. On the other side, it is also true that in 2003 Airbus's parent companies (European Aeronautic Defense and Space company and BAe Systems) had combined defense revenues that equaled Boeing's defense revenues (just under Dollars 24bn) and by logical extension equal subsidies.

Finally, there are issues relating to alleged subsidies from state and local governments and governments of sub-contractors--Airbus claims Boeing benefits from Dollars 3.2bn in tax aid from the state of Washington and from government aid to Japanese sub-contractors. The US government points to similar (though lesser) support from EU entities such as the city of Hamburg.

These accusations cry out for a political solution. The aim should be to end subsidies from whatever source. It is true, however, that from an economic welfare perspective the clearest case is against the direct launch subsidies and other targeted subsidies from provincial, state or local government (including those of sub-contractors from other countries). The case for spillover from R&D grants or even from defense contracts is much less clear-cut--and officials who wrote the 1992 agreement readily admit that the limitations here had little economic foundation but were merely political compromises. Today most technological advances flow from commercial research to the military and not the reverse, as was the case some decades ago.

For both companies there are potential hard lessons: for Airbus, it is time finally to kick away the "infant" industry crutch; for Boeing, it is time to agree that all subsidies should be open for negotiation and elimination.

Claude E. Barfield is a resident scholar and director of science and technology policy studies at AEI.