Jacque L'Cocque Chriac and his pissant buddies are rattling their sabres to try an bluff GDubya... ..Dumbass move, IMHO - "...you don't mess with Texas.....
EU Warns That WTO Aircraft Case May Lead to More Aid (Update1)
April 4 (Bloomberg) -- The European Union said today that a U.S. complaint at the World Trade Organization over EU subsidies to aircraft makers would lead to the ``maximum'' aid being doled out by European governments to Airbus SAS.
``The position of the United States government has been that it doesn't want any launch aid'' for the next Airbus plane, the A350, John Bruton, ambassador for the European Commission delegation in Washington said in an interview. ``One thing is certain,'' he said. ``If the case is actually launched the full aid will be given to the launch of the Airbus plane.''
Negotiations over ending aid to Toulouse, France-based Airbus and Chicago-based Boeing broke down last month, and the Bush administration threatened to return to the WTO to have a panel adjudicate the dispute. The threat of new aid to the A350, which is a similar size to Boeing's new 787, is the one trump card the EU has, one analyst said.
``It's self-defeating for the U.S. to go to the WTO because Boeing's basic aim is to stop launch aid to the A350,'' said Claude Barfield, an analyst at the American Enterprise Institute in Washington.
The complaint would be the largest in the WTO's 10-year history, likely stressing the global trade arbitrator with a series of cases that should rather be decided through diplomacy, Barfield and Bruton said.
``My own view is that it isn't a wise course to follow,'' Bruton said of ending negotiations and returning to the WTO.
`Risk Sharing'
Both sides pledged to suspend any new aid and suspend litigation at the WTO until April 11. With that deadline approaching, the EU is trying to head-off a possible resumption of proceedings in the WTO by warning that the time required to adjudicate the case would give the EU time to provide loans to Airbus. Those are the loans Boeing and the U.S. say must end.
``Now and then we're compelled to bring disputes'' to the WTO, U.S. Deputy Secretary of State and former U.S. Trade Representative Robert Zoellick told reporters in Brussels today.
During discussions with EU Trade Commissioner Peter Mandelson, ``we discovered that the EU's constituencies may not be comfortable moving to the elimination of launch aid,'' Zoellick said.
The U.S. complains that European governments provide Airbus with low-interest loans to help it develop and finance new aircraft. The EU says those loans pale in comparison to what Boeing receives through military contracts and state tax breaks.
Bruton said government-backed loans and other aid to aircraft makers are necessary because of the large financial risks required to build airplanes.
EU loans to Airbus are ``only a form of risk sharing or risk spreading, rather than direct subsidy,'' Bruton said.
Ending Subsidies
Zoellick and Mandelson reached an interim accord Jan. 11 that said both sides agreed to phase out aid to aircraft makers. A Boeing spokesman said the company is only committed to an agreement that respects that goal.
``The goal of the Jan. 11, 2005, agreement between the U.S. and EU is to end subsidies. Boeing stands firmly behind the U.S. government's effort to reach that goal, including WTO litigation if necessary,'' said Richard Dalton, a Boeing spokesman.
The U.S. filed its initial complaint with the WTO on Oct. 6, claiming that more than $15 billion in government loans to Airbus amounted to illegal subsidies under global trade rules. The EU countered, saying Boeing has benefited from unfair support of as much as $23 billion.
Boeing and Airbus are the only two manufacturers of large commercial jets. Boeing has seen its share of the market drop to 48 percent from 73 percent in 1993, losing its title as the world's largest planemaker in 2003 when Airbus outsold it by 305 aircraft to 281. The U.S. says government aid to Airbus once justified to help an ``infant industry'' is no longer needed.
In the aircraft dispute, ``the biggest winner will be the U.S., but the U.S. and Boeing can't just put their head in the sand about the aid Boeing gets,'' Barfield said.
To contact the reporter on this story:
Mark Drajem in Washington at mdrajem@bloomberg.net
To contact the editor responsible for this story:
Joe Winski at jwinski@Bloomberg.net
Last Updated: April 4, 2005 16:30 EDT
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