EU And US Bicker Over Airbus Launch Aid At WTO

by Robin Pilgrim, LawAndTax-News.com, London

07 February 2006

Last week the US added a further complaint to its WTO case against EU subsidies for the Airbus program, objecting to a training subsidy from the UK's Welsh Assembly.

The additional complaint concerns a January 26 subsidy from the Welsh Assembly for training new workers for the Airbus A350 passenger airplane, which is scheduled to enter service in 2010, two years after a similar plane from US rival producer Boeing Company is scheduled to enter service.

"Unfortunately, the EU member States have continued to grant new subsidies to Airbus, even as our WTO case proceeds," said US Trade Representative Rob Portman. "By taking this step, we are ensuring that the new subsidies will be included in our case."

Portman said that even after nearly two years seeking to end subsidies for large civil aircraft production, the United States still would prefer a negotiated resolution with the Airbus consortium countries France, Germany, Spain and the United Kingdom.

Also last, at the WTO in Geneva, the United States blocked a retaliatory EU case against alleged US subsidies of Boeing. Under WTO rules, the United States cannot block such a request a second time.

The EU also ramped up its position in Geneva, demanding the creation of a new panel to probe what it says are additional US subsidies for Boeing, beyond those cited in the earlier case it launched at the WTO.

The first round of WTO hearings into the complex set of disputes is scheduled for June.

Last October, Airbus chief operating officer, John Leahy revealed that the company would hold off from taking advantage of government support for the 350 project for more than a year, in order to allow the EU and the United States to iron out a dispute over subsidies for their respective airline industries.

"We are opening a window of opportunity to resolve the trade dispute as long as things are treated equally on both sides of the Atlantic," he explained.

However, the Office of the US Trade Representative was less than impressed by the offer, saying: "We take no comfort from any offer to postpone the actual payment of the launch aid these countries have already promised to provide. The announcement of their commitment to back the A350 will affect Airbus’s financing costs regardless of when they formally write the check."

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