Thu, Sep 16, 2004
EU: You Stop Propping Up Yours, We'll Stop Propping Up
Ours
Sure, says the European Union, we'll cut subsidies to Airbus --
just as soon as the US cuts its subsidies to Boeing. That's pretty
much the EU position going into trade talks with the US on
Thursday.
It was the latest shot fired in an increasingly hot war over how
much help each company gets from its respective governments. The
Bush administration has demanded a review of the 1992
trans-Atlantic accord that controls subsidies on both sides of the
ocean. As it stands, that pact allows countries to contribute up to
33-percent of the development costs in developing a new line of
aircraft.
Already, the EU has ruled out any unreciprocated moves on the
issue, as demanded by the US. "We would not accept this
unilaterally," EU spokeswoman Arancha Gonzalez.
President Bush last month said he would challenge what he termed
"unfair" EU subsidies for Boeing's chief rival. He threatened to
make his complaint to the World Trade Organization.
At the center of the controversy is a complaint and a
cross-complaint: The US says EU governments loan money to Airbus at
ridiculously low rates. If the new model isn't profitable, then
Airbus doesn't have to pay them back. On the other hand, the EU
says America is propping up Boeing with government contracts in
non-commercial aviation and aerospace projects. The EU also
complains about the tax breaks and other incentives offered to
Boeing by communities hoping to land the 7E7 production
facility.
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