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Mon, Apr 11, 2005

Just When You Thought There'd Be A Settlement

US, EU Officials Continue To Bicker Over Subsidies

The feud between Airbus and Boeing, now playing out under threats from both sides that this whole matter will end up in a world trade court, grew even more rancorous on Monday, as the EU demanded Washington end tax breaks and research help to Boeing.

Reductions in aid to commercial aircraft manufacturers on both sides of the Atlantic "have got to be done in an equal and balanced way," said EU Trade Commissioner Peter Mandelson in an interview published in Brussels. As ANN reported over the weekend, the EU and US failed to reach a settlement in the thorny dispute, blowing right past the April 11th deadline for achieving such an accord. But both sides have agreed to continue talks in hopes of averting what would be the biggest suit ever brought before the World Trade Organization.

In the meantime, however, both sides are free to pull the trigger on their legal guns, waiting in the wings. Yet, Mandelson told the Belgian newspaper "It should be possible still at this stage to reach an amicable settlement to this dispute. Airbus and Boeing could do with less public subvention."

The dispute was triggered by Boeing's announcement that it would go ahead with development of what is now called the 787 Dreamliner, while Airbus said it would build the A350 to compete. Airbus is now awaiting word on $1.7 billion in launch aid for the A350 project, while Boeing openly shopped for the most favorable tax breaks in locating its 787 manufacturing components. Final 787 assembly was eventually awarded to the company's plant in Everett, WA.

If the current rhetoric is any indication, efforts to settle the dispute are going nowhere fast. "A very strong demand was being made on the European side to abandon immediately the entire sort of basic principles and character of all government investment in Airbus without commensurate, offsetting and balancing moves by the American side as regards Boeing," Mandelson said, quoted by Bloomberg News. "That doesn't exactly make for a good negotiation" or a "very fair settlement."

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

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