Accusations fly in WTO dispute over Airbus, Boeing
2007-03-21

Category World Trade Organization Nations France U.S. Belgium Germany Spain City Brussels Company Boeing Co. Airbus

The European Union and United States traded accusations here on Wednesday during hearings at the World Trade Organisation into their long-running dispute over aircraft subsidies for Airbus and Boeing.

On the second day of action, the EU accused the US of trying to "rewrite history" by rejecting a former deal, while Washington said that European subsidies to Airbus had seriously undermined Boeing's market position.

The two sides launched reciprocal complaints at the WTO over subsidies to the two companies in October 2004.

Prior to this, both parties had been bound by a 1992 treaty limiting subsidies to both companies.

Washington views this accord as null and void and not relevant to the WTO complaint, but the chief EU legal advisor told a closed panel here that this approach was "tantamount to rewriting history."

"It (the US) cannot now attempt to challenge as prohibited subsidies the very same elements of financing to which it acquiesced and, indeed, actively contributed to," Pieter Jan Kuijper said in a transcript of the closed session.

"Is it fair that the United States tears up a treaty and turns around to act as if it had never existed?" he asked.

Washington is targeting government loans to Airbus for the launch of new models, while Brussels was due to make its written case later this week against assistance to Boeing from US state governments, the US Defense Department and the space agency NASA.

A US official earlier told the WTO panel that Britain, France, Germany and Spain paid 15 billion dollars in launch aid to Airbus, according to a 72-page statement released here Wednesday.

However, the "resulting benefit" to the European aircraft maker "is well over 100 billion dollars," he argued.

"Launch aid has enabled Airbus to launch a series of large commercial aircraft models at a scale and a pace that would have been impossible without subsidies."

The United States said government financial support had helped Airbus become the world's number one between 2003 and 2006, seriously undermining Boeing on the marketplace

"If launch aid is permitted to continue, the adverse effects seen in recent years will continue as well," the US official added.

This was rejected by Kuijper, who claimed that Boeing "is in excellent health."

Despite the legal case being mounted behind closed doors, the US side was holding out for some kind of an accord before the panel intervenes with rulings that might find both sides at fault.

A US source welcomed a recent statement from Airbus's new chief executive, Louis Gallois, saying that he was ready to examine a wide range of finance for the company's new A350 airliner, even if he did not exclude state loans.

"Airbus is approaching differently the financing of the A350. It's a good thing. They need to be given room to do that," the US source said.

The A350 is aimed at competing directly with Boeing's new 787 from 2013.

The US administration's opening statement to the WTO panel on Tuesday took a sterner approach.

"Remarkably, in the midst of this dispute, the Airbus governments are increasing their involvement in Airbus, not reducing it," the US official said.

"Just a few weeks ago, the French prime minister announced that France would provide 100 million euros to support research into new carbon fibre composite technologies for Airbus," he added.

French Prime Minister Dominique de Villepin announced on March 1 that Paris would release 100 million euros (133 billion dollars) for the composite materials industry.

Villepin said it would be "decisive for the future" of the French aircraft industry. Airbus, dominated by French and German interests, is based in France.