US scraps aviation deal with Europe; files WTO case over Airbus
WASHINGTON (AFP) - The United States opened an aviation trade war over European subsidies to Airbus, scrapping a 12-year-old accord and filing a World Trade Organization complaint.
The US attack, launched in the run-up to the November 2 presidential election, makes good on President George W. Bush's threat to take the politically charged case to the global trade body.
US Trade Representative Robert Zoellick released a statement saying the United States had been trying to convince Europe to halt billions of dollars in "unfair subsidies" to Airbus.
"But the EU and Airbus appear to want to buy more time for more subsidies for more planes," he said Wednesday.
"That isn't fair, and it violates international trade rules. Since we could not agree, the United States decided to pursue resolution through the agreed procedures of the multilateral trading system, by bringing a WTO case before an international dispute resolution panel."
The United States said it had decided to scrap a 1992 transatlantic accord, which had allowed European governments to extend repayable, royalty-based loans up to one-third of the costs of developing new aircraft.
"Consistent with today's decision to move forward with a WTO case, the United States also exercised its right, as provided by the 1992 agreement's terms, to terminate that agreement," the USTR said.
In Brussels, the European Trade Commissioner Pascal Lamy, who leaves his post at the end of the month, promised a fight ahead.
"The US move in the WTO concerning European support to Airbus is obviously an attempt to divert attention from Boeing's self-inflicted decline," he said in a statement.
"If this is the path the US has chosen, we accept the challenge, not least because it is high time to put an end to massive illegal US subsidies to Boeing which damage Airbus, in particular those for Boeing's new 7E7 programme."
US giant Boeing Co. has been raising concerns here that Airbus will use European government subsidies to launch a rival plane to its planned twin-aisle fuel-efficient Dreamliner 7E7 jet.
In a US election year, Boeing's campaign has added bite.
Bush told Boeing Co. aviation workers during a campaign rally in Seattle, Washington, August 14 that he was ready to take a case to the WTO over the Airbus subsidies.
Since its creation, Airbus has overtaken Boeing in many aviation sectors and Bush said the government payments were "unfair."
"Boeing shares the government's view that EU subsidies to Airbus -- now a successful and profitable company -- must cease," Boeing president and chief executive Harry Stonecipher said.
"We remain determined to ensure that competition in the large commercial aircraft market is undistorted by such subsidies."
Zoellick said the United States had urged the Europeans to agree that neither side should provide new subsidies to aircraft manufacturers.
"That's a fair offer," he said.
The United States was still interested in reaching a new agreement with the Europeans, the US trade chief said.
"The United States remains interested in an agreement that ends all new subsidies. So as this case proceeds, we remain open to negotiating a new accord as long as it ends the new subsidies," Zoellick said.
In Geneva, WTO officials confirmed the United States had triggered the disputes settlement procedure by asking for formal consultations with the European Union (news - web sites) over subsidies to Airbus.
The two parties now have 60 days to start negotiations to find a solution to the dispute on their own, a WTO spokesman said.
If they fail to find a negotiated settlement, the WTO will then appoint an independent panel of experts at the request of the United States to examine and rule on the complaint.