U.S. to file WTO case over subsidies to Airbus

Tue., May 31, 2005

Martin Crutsinger Associated Press

WASHINGTON – The Bush administration said Monday it would bring a trade case alleging the European Union is providing illegal subsidies to Airbus, the major competitor to U.S.-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 European Union 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 plane model is developed.

Both sides argue 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 would be filed with the Geneva-based WTO today. “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 United States would file a case against the EU was the latest twist in the dispute over whether the world’s two biggest aircraft manufacturers were receiving improper support from their governments. In January, both sides had agreed to put WTO cases they had filed against each other on hold in an effort to seek a negotiated settlement during a 90-day period.

However, those talks went nowhere as both sides seemed to become entrenched in their positions.

U.S. officials accused the EU of not being serious about the talks while EU Trade Commissioner Peter Mandelson said that the Bush administration had no room to reach a negotiated settlement because of heavy political lobbying by Boeing.

Portman said the administration’s hand was forced because the EU is no longer willing to hold off on providing further government support to Airbus as it develops new planes. Portman said the EU has only proposed to reduce government subsidies, not end them as the United States is seeking.