Less Turbulence For Airbus, Boeing | Business| Economy and finance news from a German perspective | DW | 07.12.2004
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Less Turbulence For Airbus, Boeing

EU Trade Commissioner Peter Mandelson and his US counterpart, Robert Zoellick, have decided to allow more time for talks to settle a transatlantic row over government aid for aviation rivals Boeing and Airbus.


The Boeing-Airbus subsidy row has sailed into somewhat calmer skies

It was the first time since taking up office that the EU’s new trade chief met with his American colleague in Paris on Monday against the backdrop of reinvigorating the stalled global trade talks. Chief among the issues was the tit-for-tat spat over government subsidies for Europe’s Airbus consortium and Boeing.

After the meeting, the men announced they would continue talking over the new few weeks to try to settle their differences by negotiation, but would retain the option of litigation through the World Trade Organization (WTO).

"If we are going to avoid litigation in pursuit of the cases that both of us have now entered, we are going to have to have some pretty serious discussions about the alternative to that litigation," Mandelson told reporters.

"I am interested in seeing how we can resolve our differences through a proper set of negotiations," he added.

His US counterpart, Zoellick, said that if negotiations did not succeed, "litigation is an option" and that the Bush Administration was prepared for that eventuality.

Fresh start

Mandelson, a close ally of British Prime Minister Tony Blair, had promised “a fresh start” in transatlantic negotiations which turned bad after the United States filed a complaint with the WTO in October challenging European loans to help Airbus develop aircraft, such as the new A380 super-jumbo jet. The EU responded by filing its own case against the US government over aid for Boeing.

The filing of cases triggered a 60-day consultation period, which expired Monday. Ordinarily the failure to reach a settlement by consensus would prompt one or both of the parties to ask the WTO to settle the case by a special panel and ultimately result in punitive sanctions. But on Thursday a US official said Washington would delay referring its complaint to the WTO in order to allow Mandelson time to review the matter.

Bumpy ride?

According to EU trade experts, Boeing has received around $23 billion (€17.1 billion) in governmental development aid since 1992. The European Aeronautic Defense and Space Company (EADS) – the major owner in the Airbus conglomerate – has taken the American competitor to task for profiting from US Defense Department subsidies for research in aviation and space science and NASA projects.

Airbus A 318

Airbus A318

The US accuses the EU of handing out “unfair subsidies amounting to billions of dollars” for the development of Airbus, a four-country consortium designed to rival the market leader Boeing in building giant commercial aircraft.

The aviation dispute is only the latest in a series of trade rivalries between the European Union and the US. Only in October were the two sides able to find a solution to a year-long row over sanctions the EU had applied as a response to US corporate tax breaks for companies with foreign operations.

All clear for take off

While the international trade dispute over aviation simmers, Airbus developers in Germany announced that the last obstacle to extending the runway at the Hamburg production facility Finkenwerder had been cleared.

Airbus-Montagehallen in Hamburg

Airbus construction facility for the A318, A319, A321 and A380 in Hamburg

After months of negotiations with owners of property adjacent to the proposed runway, the city council on Monday announced it had purchased four parcels of land from a fruit orchard owner, paving the way for the tarmac to be extended to the necessary length for the arrival of the new A380 super-jumbo jets. The construction of the runway and the production of the A380 had been delayed for 18 months due to a land dispute. A local church parish, which owned property bordering the Finkenwerder facility, had refused to sell to land the city for the purpose of extending the Airbus tarmac. Without a longer runway, the plant could not have built the super-size aircraft. Hamburg risked losing the lucrative contract and put 2,500 to 4,000 jobs in peril.

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