Europeans File Promised WTO Countersuit Over Subsidies

One day after the US filed its World Trade Organization lawsuit against the European Union over subsidies paid by EU governments to Airbus, the Europeans struck back, accusing local US governments of spending even more money on Boeing.

In their filing, the Europeans said government aid to Airbus amounts to investment, not subsidy. In filing, EU Trade Commissioner Peter Mandelson lashed out at the US and at Boeing.

"I am disappointed that the US has chosen this confrontation with Europe," he said. "America’s decision will, I fear, spark probably the biggest, most difficult and costly legal dispute in the WTO’s history. It will be hard fought on both sides and, I can assure you, Europe’s interests will be fully defended."

Mandelson said he'd done more than his share in trying to reach a compromise agreement with his US counterpart on the aircraft-maker subsidy issue.

"I went the extra mile for an amicable solution," he told reporters, "most recently last week by proposing an accelerated negotiation in which I was prepared to offer a reduction of up to 30 per cent of launch investment to the new A350 – and on tighter terms – in return for a similar offer on the American side.

"But there was no appetite for compromise in Washington," Mandelson continued. "Boeing demanded the complete, immediate renunciation by Airbus of all repayable, royalty-based launch investment as a prior condition to negotiation.

"In doing so, Boeing ensured that no negotiation took place. No commensurate balancing package was on offer at any stage to deal with Boeing’s extensive multi-billion dollar financing from the American taxpayer."

The Europeans figure it this way: Not only does Boeing get cities, counties and states to compete for its manufacturing facilities by offering generous tax breaks, but NASA has poured $22 billion in grants into the Chicago-based company's coffers. They accuse Washington of giving Boeing more than $350 million a year in tax subsidies which have, according to the EU, been twice ruled illegal by the WTO. Finally, the Europeans accuse Japan of sending over $1.6 billion in launch aid for the 787.

"Europe and America are going head to head over the commercial rivalry of two companies, Boeing and Airbus, who should be left to compete in a global marketplace big enough to accommodate them both," Mandelson said.

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