US To Press Ahead With WTO Airbus Complaint

by Robin Pilgrim, LawAndTax-News.com, London

17 October 2006

Although Airbus said it would not draw down aid for its A350 project, the US government said last week that it would continue with its complaint at the WTO that Airbus has benefited from unfair subsidies from EU governments.

The US Trade Representative's office (USTR) said on Wednesday it would suspend its second complaint, accepted by the WTO last May, over training subsidies provided by the Welsh Assembly, but would move forward with its main complaint.

Airbus's majority owner, EADS, said earlier in the week that its shareholders had approved the start of work on the A350, a fuel-efficient plane designed to compete with the Boeing 787 'Dreamliner', and that the governments of France, Germany, Spain and the United Kingdom were offering up to EUR1.7bn in launch aid. However, EADS said that it would not take the money "as long as there is a credible prospect of negotiations and similar restraint is being undertaken in the United States."

USTR spokesperson Christin Baker said: "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."

A spokesman for EU Trade Commissioner Peter Mandelson called the American reaction "surprising," given that the EU had "moved substantially" on the issue.

Airbus has 140 nonbinding orders for the plane, and hopes to have a total of 200 by the end of the year; but given recent high-profile delays with its A380 program, customers may take some convincing about the A350.

On Friday, EADS shares fell, while Boeing stock rose.

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