Airbus Defenders Question Tokyo About Aid To Boeing

What started as a disagreement over the way commercial aircraft R&D is funded has grown into a trade war between the EU and the US and now, other countries are being dragged into the middle of the fighting. The EU now wants to know more about Japan's funding of Boeing's 7E7 Dreamliner.

The questions came just a day after the Bush administration took its beef over government subsidies for Airbus to the World Trade Organization. The US also scrapped a 1992 agreement by which such subsidies have been governed.

"The decisions by the US and the EU will also have a collateral effect on Japan’s contribution to the development and the building of Boeing’s new 7E7 airliner," said Etienne Reuter, head of public affairs at the European Commission delegation in Tokyo, in an interview with the London Financial Times. "The important subsidies that Japan has pledged to this project had indeed been perceived in the market as a circumvention of the EU-US agreement in 1992."

The EU says Japan has dedicated $1.6 billion to developing the 7E7, parts of which will be built in the Land of the Rising Sun. But the Japanese, like a lot of people in global aviation, are getting a little nervous. "We are carefully monitoring the progress of the WTO negotiations," one Japanese trade official told the Financial Times, "and keeping our fingers crossed that it will not lead to trade friction. But this is an issue that could open a Pandora’s box with regard to the 7E7."

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