Talks On Launch Subsidies Break Down
Government officials say
talks between trade representatives from the US and EU have broken
down -- threatening to spark again the long-running fight over
subsidies to commercial airplane makers.
"Despite our best efforts, it is clear that the European Union
is unwilling to eliminate launch-aid subsidies," said Deputy
Secretary of State Roberk Zoellick, who was the US trade
representative when the matter first came to a head last year. Even
though he's moved over to State, he's still on the case. He spoke
in an interview with the New York Times.
But the EU's spokesman in Washington said Zoellick's counterpart
in Brussells, Peter Mandelson, "is completely surprised that
such a statement should be given to the press."
There are still three weeks left to negotiate a settlement in
the case of government subsidies by European governments aimed at
helping Airbus launch new product lines. The dispute flared over
the European aerospace giant's plan to build the A350, which would
compete with Boeing's new 787 Dreamliner.
"There are clearly difficult issues at stake," EU spokesman
Anthony Gooch told the Times, but Mandelson "doesn't recognize the
portrayal of the state of play as offered by the U.S. side. If Mr.
Zoellick is announcing that the negotiations are at an end, Mr.
Mandelson has not been informed of this development."
As ANN reported last week, Washington's complaint
to the World Trade Organization came after former Boeing CEO Harry
Stonecipher demanded an end to launch aid given Airbus by European
governments under the terms of a 1992 trade agreement. The
provision allowed Airbus to take massive government loans for new
projects. If the projects flopped, then Airbus didn't have to pay
back the loans.
Airbus, on the other hand, accuses Boeing of soliciting -- and
accepting -- subsidies from local governments in the form of tax
breaks designed to lure Boeing manufacturing facilities.
In his remarks on Friday, Zoellick stopped just short of
declaring the talks over. But if the two sides can't reach some
sort of agreement before April 11th, the entire matter could end up
in a lawsuit filed before the World Trade Organization -- the
biggest dispute that body has ever faced.