Deal Would Avoid World's Biggest Trade Lawsuit

Even with threats and Congressional resolutions a-flying, tempers flaring and lawyers warming up in the bullpen, there are still faint rays of optimism peeking through the dispute between the US and the European Union over subsidies paid to Airbus and Boeing.

They're faint rays of hope, to be sure. But European Commission President Jose Manuel Barroso said Wednesday, he's still optimistic.  "I believe it is possible to reach an amicable agreement... in the Boeing-Airbus affair.'' Barroso was quoted by Reuters.

As ANN has extensively reported over the past year, the subsidy battle was touched off by former Boeing CEO Harry Stonecipher, who complained to the Bush Administration that the subsidies paid to Airbus by European governments was unfair. As a result, the US unilaterally pulled out of a 1992 agreement with the EU covering such payments and threatened to take the whole matter to court before the World Trade Organization. It would be the biggest trade-related lawsuit the world has ever seen.

But the US didn't pull the trigger on its lawyers. Instead, trade representatives agreed to try to talk it out. They did -- talking right past an April 11th deadline. Shortly after that, however, France accepted Airbus's application for approximately $1.6 billion in launch aid for the A350, an aircraft that would compete directly with Boeing's new 787.

So last week, US negotiator Robert Zoellick fired off a letter to his EU counterpart, Peter Mandelson, indicating his patience is fast running out. Congress has passed a resolution urging Zoellick and his colleagues to pull the trigger on a WTO lawsuit. But Barroso said Wednesday EU Trade Minister Mandelson is looking forward to "constructive, friendly relations with his counterpart in the United States and that he believed it possible the EU and US can still reach an "amicable agreement" in the Airbus-Boeing battle.

FMI: www.wto.org, www.boeing.com, www.airbus.com