US WTO Case Against EU Subsidies to Airbus

U.S. Sticks With WTO Case Against EU Subsidies to Airbus

Rejects offer by Airbus companies to accept no launch aid through 2006

By Bruce Odessey
Washington File Staff Writer

Washington -- The United States rejects as inadequate the offer by the European companies that produce Airbus airplanes to accept no launch aid from governments through 2006, the Office of the U.S. Trade Representative (USTR) says.

USTR spokesperson Christin Baker said in an October 6 written statement that her office would continue its case in the World Trade Organization (WTO) against the European Union (EU) subsidies.

"We take no comfort from any offer to postpone the actual payment of the launch aid these countries have already promised to provide," Baker said. "The announcement of their commitment to back the A350 [aircraft] will affect Airbus's financing costs regardless of when they formally write the check."

USTR's statement followed the announcement earlier that day by EADS, the aerospace group that owns 80 percent of Airbus, that shareholders have approved start of work on the A350, the fuel-efficient jet designed to compete with the Boeing 787.

An EADS statement said that while the governments of France, Germany, Spain and the United Kingdom have provided letters of general support for the A350, Airbus owners have decided against taking the money through 2006 "as long as there is a credible prospect of negotiations and similar restraint is being undertaken in the United States."

The United States has brought a WTO complaint against the EU over Airbus alleging violations of subsidy rules. The EU has retaliated with a WTO case of its own, alleging that U.S. contracts with Boeing for research and development amount to subsidies, a charge the United States rebuts. In July, the WTO set up panels to investigate the two sides' complaints.

USTR's Baker called the four EU countries' commitment to provide launch aid "yet another step in the wrong direction," making negotiations to resolve the dispute that much more difficult.

"It's clear that the EU countries are unwilling to stop subsidizing Airbus," she said. "Therefore, we will continue to push ahead with our WTO case."

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