April 9, 2005 in Business

U.S., EU can’t solve airplane subsidy fight

Associated Press

WASHINGTON – The Bush administration said Friday that a 90-day negotiation period had failed to resolve a bitter trade dispute with the European Union over commercial airplane subsidies.

While U.S. officials held out the threat of resuming a trade case against the EU, they said the administration would not take that step as long as Europe did not go forward with new development subsidies for Airbus, the major competitor to U.S.-based Boeing Co.

“In the event that the EU proceeds with additional subsidies for Airbus large civil aircraft, the United States will return to the (World Trade Organization) dispute settlement,” Richard Mills, a spokesman for the U.S. Trade Office, said.

The administration announcement did not come as a surprise. No talks had been scheduled this week in advance of the Monday deadline, and both sides had been publicly sniping at each other.

Deputy Secretary of State Robert Zoellick said in Brussels, Belgium, this week that the EU did not appear to be serious about negotiations. EU trade chief Peter Mandelson said Zoellick’s hands were tied because of political lobbying by Boeing.

While Zoellick started the talks in January, he has since switched jobs and is now the No. 2 official at the State Department. However, the administration announced Friday that he will continue to handle the Boeing-Airbus dispute while the Senate is taking up the nomination of Rep. Rob Portman, R-Ohio, to be the new U.S. trade representative.

Mills said the administration was ready to resume negotiations at any time but no new talks have been scheduled. Talks broke down last month after Zoellick and Mandelson had a heated trans-Atlantic telephone discussion of the issue.

A spokesman for Airbus’ parent said the company was encouraged that no immediate complaint was being filed with the WTO.

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