Brussels hopeful of winning dispute against US
By Edward Alden and Caroline Daniel in Washington and Raphael Minder in
Brussels
Published: October 6 2004 14:43 | Last updated: October 7 2004 12:22
World Trade Organization & AirbusThe European Union on Thursday said it
was confident of winning a dispute against the US at the World Trade
Organization over government subsidies for Airbus and Boeing, their
flagship civil aircraft makers.
“We have carefully looked at the rules and we are confident that in this
case... we have chances of winning it,” said Arancha González, the EU
spokeswoman for trade.
The US and the European Union on Wednesday launched the biggest dispute
in the history of the World Trade Organisation in an effort to end what
each side said are massive subsidies to Boeing and Airbus.
In a dispute settlement case filed at the Geneva headquarters of the
WTO, the US alleged that Airbus had received a total of at least $15bn
in illegal "launch aid" from the France, UK, Germany and Spain, allowing
it to overtake Boeing as the world's largest aircraft maker. The US also
said it would terminate a 1992 bilateral agreement that had curbed but
not ended subsidies, alleging minor violations by the EU.
Airbus and Boeing pose huge test for EU-US relations
Whether or not President George W. Bush is re-elected, Robert Zoellick
and Pascal Lamy have handed their successors the biggest trade dispute
that has ever faced the US and the European Union.
The EU Commission responded immediately by filing a counter-case
charging that Boeing had received about $23bn in prohibited subsidies
since 1992 in the form of research and development assistance from US
government agencies. The EU also challenged pledges from Washington
state to offer about $3bn in tax breaks for Boeing production of its new
7E7 jet.
Wednesday's moves raise the prospect of an unprecedented double ruling
by the WTO, which could conclude that both aircraft makers have been
receiving funding that contravenes WTO rules, and may authorise billions
of dollars in trade retaliation.
Ms González said relations between Brussels and Washington would not be
affected by the dispute and denied earlier remarks by EU officials
arguing that the decision was driven by politics, with the US hoping to
shore up President George W. Bush's re-election prospects and responding
to charges from Democrat John Kerry that he has failed to enforce trade
agreements.
Ralph Crosby, chief executive of the North American division of EADS,
the parent company of Airbus, said he was "disappointed" by the action
taken by the US government noting that it comes a month before the
elections in the US. "It is rather a curious coincidence."
But US officials said the move was dictated by Boeing's commercial
competition with Airbus. Boeing fears that the four European governments
will offer new aid, in the form of loans repayable based on future
sales, to allow Airbus to build a competitor to its 7E7 "Dreamliner" jet.
Boeing, which in the past had opposed a WTO case over fears it would
anger its airline customers, said yesterday it supported the action.
"Boeing will support any course of action the US government feels is
necessary to reach a new agreement" that ends all subsidies, said Harry
Stonecipher, Boeing chief executive.
US officials said they are still hoping for a negotiated solution over
the next 60 days, the mandatory consultation period.
Robert Zoellick, US trade representative, said the US remains open to
negotiating "an agreement that ends all new subsidies." But Pascal Lamy,
the EU's trade commissioner, said: "The US move . . . is obviously an
attempt to divert attention from Boeing's self-inflicted decline . . .
If this is the path the US has chosen, we accept the challenge."