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The A350 from Airbus would take on Boeing's DreamlinerImage: dpa

EU, US Spar Over New Airbus Aid

DW staff (mry)
May 19, 2005

The European Union said Thursday it still hopes to resolve a row with the United States over aircraft subsidies without resorting to legal action, despite a new aid request by Airbus which risks re-igniting the dispute.


The US government warned it could yet pursue legal recourse at the World Trade Organization against the EU after European aircraft maker Airbus appealed for British government aid to develop its A350 long-haul plane.

The EU's executive European Commission said that public aid to help the launch Airbus's new A350 airliner was legal under WTO rules and that Brussels still wanted a deal with the US over state aid for aircraft makers.

"In the view of the Commission, the launch investment is WTO legal and as things currently stand it is part of the commercial landscape for aircraft development in the EU," spokeswoman Francoise Le Bail told a news conference.

Earlier Thursday, Airbus said it had lodged a request with the British government for reimbursable launch aid for its A350 program, prompting US competitor Boeing to cry foul. Brussels and the United States have been trying for months to negotiate an agreement to end the dispute over state subsidies to Airbus and Boeing, to avoid taking the case to the WTO.

The United States believes financial aid given to Airbus to launch new aircraft is illegal, while the Europeans accuse the US of subsidizing Boeing through military contracts.

Le Bail warned that possible US action to bring the case before the WTO would be counterproductive. "We have always said we prefer to resolve the discussion bilaterally rather than going to the WTO," she insisted. "We are willing to negotiate the reduction in available launch investment with the US, the condition being that there is also a reduction on the Boeing side, the American side."

Warning from Washington

The US Trade Representative (USTR) office warned that the British government's decision on the request for A350 launch aid would be pivotal in the dispute.

"Our position has been clear: no new subsidies," USTR spokeswoman Neena Moorjani told the AFP news agency. "The preferred outcome is a negotiated agreement on the elimination of subsides. However, if additional subsidies are committed, we have said that we will resume litigation at the WTO and that remains our position."

Boeing 7E7 Dreamliner
A computer generated drawing provided by Boeing Co. shows a Boeing 787 Dreamliner.Image: AP/Boeing

The twin-engine Airbus A350 is aimed at competing with Boeing's planned fuel-efficient 787 Dreamliner, which the US company hopes will help it regain the top spot in global commercial aviation.

The A350 was approved in December 2004 by Airbus shareholders European Aeronautic Defence and Space Company, which owns 80 percent of the company, and BAE Systems of Britain, which has a 20-percent stake.

Unsurprisingly, Boeing said Thursday it "strongly opposes" the request for British government help. Boeing spokesman Richard Dalton said Airbus executives had previously said publicly for months that they did not need launch aid for the A350

"Seeking government assistance is just another very strong example of the competitive advantage Airbus has received for decades at European taxpayers' expense," Dalton said.

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