Airbus and Boeing dispute goes to WTO
October 7, 2004
The battle between America's Boeing and Europe's Airbus reached fever pitch on Wednesday when the US government launched an official complaint at the World Trade Organisation over what it calls unfair subsidies to the European airline manufacturer Airbus.
The US government and Boeing argue that Airbus which now delivers more airlines worldwide than its American competitor Boeing has outgrown the need for support from European taxpayers to help it launch planes onto the market. Europe provides loans to Airbus to help develop new airlines, and for aircraft construction or to assist it launch new planes onto the market.
However the EU lost no time in launching a counter suit, charging that Boeing has received some $23 billion in US subsidies since 1992. According to Airbus this includes about $3.2 billion in tax breaks or incentives from Washington state to persuade the American manufacturer to base its assembly plant for its new 7E7 Dreamliner plane there.
And EU officials were not mincing words on Wednesday. European Union Trade Commissioner Pascal Lamy said in a statement that the US complaint was "obviously an attempt to divert attention from Boeing's self-inflicted decline,". He added if this was the path the US has chosen, he accepted the challenge - not least to end what he described as massive illegal US subsidies for Boeing's new 7E7 program," he said.
Lamy also hinted that the timing of the WTO dispute was to coincide with the US presidential campaign from President George W Bush who is facing criticism from his Democratic challengers over the loss of US manufacturing jobs in recent years.
In 1992 the EU and the US agreed to a deal which limited subsidies for the world's two largest airplane makers to 33 percent of the production costs for new models.
However as Airbus increased it's share of the airline market, Chicago-based Boeing expressed frustration that Airbus has continued to get government money to help it develop especially as it became apparent that the French based manufacturer would develop a new plane known as the A380 to directly compete with Boeings new 7E7 or Dreamliner plane.