Airbus are threatening the UK government with mass unemployment at BAe unless we cough up the dough they demand to develop the untill recently not needed and half baked A350.
U.S. to pursue Airbus case
WTO trade complaint to target EU subsidies
From Tribune wire services
Published May 31, 2005
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WASHINGTON — The Bush administration said Monday that it will bring a trade case alleging the European Union is providing illegal subsidies to Airbus SAS, the major competitor to Chicago-based Boeing Co.
U.S. Trade Representative Rob Portman said the administration had decided to proceed with a case before the World Trade Organization in light of preparations by member states of the EU to commit $1.7 billion in new launch aid to Airbus.
“The EU’s insistence on moving forward with new launch aid is forcing our hand,” Portman said in a statement announcing the administration’s decision.
Launch aid is the support provided when a new airplane model is developed.
Both sides argue that the other is providing WTO-illegal subsidies to support a domestic airplane manufacturing industry.
Portman said the formal request to establish a WTO hearing panel in the dispute would be filed Tuesday with the Geneva-based WTO.
“We continue to prefer a negotiated settlement and we would rather not have to go back to the WTO,” Portman said. “By requesting the panel, the United States is providing time for the EU to reconsider its plans to provide new subsidies.”
The announcement that the U.S. would file a case against the EU was the latest twist in the extended dispute over whether the world’s two biggest aircraft manufacturers were receiving improper support from their governments.
The move comes eight months after the U.S. filed its initial complaint, saying the launch aid provided an unfair subsidy to the European aircraftmaker. The EU countered with a lawsuit of its own claiming Boeing has benefited from unfair support of as much as $23 billion.
The two sides tried to negotiate a deal without resorting to a WTO panel, agreeing in January to suspend any new aid and to defer litigation until April 11.
But those talks broke down in mid-March, with the U.S. saying EU governments weren’t committed to ending new loans and accusing the 25-nation bloc of trying to change terms of a preliminary agreement. EU Trade Commissioner Peter Mandelson said the Bush administration had no room to reach a negotiated settlement because of heavy political lobbying by Boeing.
Portman said the administration’s hand is being forced because the EU is no longer willing to hold off on providing further government support to Airbus as it develops new planes. Portman also said in the negotiations the EU has only proposed to reduce government subsidies, not end them as the U.S. is seeking.
“We still believe that a bilateral negotiated solution is possible, but the negotiations won’t succeed unless the EU recommits to ending subsidies,” Portman said.
Boeing spokesman Russ Young said the company strongly supported the trade representative’s decision but hoped for a settlement.
“We agree with the [trade representative] that a negotiated settlement is preferable and hope serious U.S./EU discussions will continue as litigation proceeds,” he said. “The company stands ready to support the [trade representative] in any way necessary to bring a prompt end to market-distorting subsidies to Airbus.”
Earlier Monday in Brussels, the EU announced that it had made a new offer to the U.S. to cut government aid.
“We are proposing that there be an immediate cut in government support on both sides and after that further cuts,” said Claude Veron-Reville, Mandelson’s spokeswoman.
A WTO panel would have to decide whether the financing offered to Airbus by European governments constitutes “prohibited” or “actionable” subsidies under global trade rules. In the first instance, a final decision against the EU, which may take as long as a year, would force the bloc to drop its support. If WTO arbitrators find the aid “actionable,” the EU may open itself to retaliatory sanctions in the form of extra tariffs on its exports to the U.S.
The EU has said in the past that it would resume its WTO case against the U.S. if the Bush administration restarted the U.S. case.
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