Subsidies Battle With Airbus Will Go The Distance

Boeing's law firm says it does not expect a negotiated settlement between the United States and the European Union before opposing government subsidy complaints make it through the World Trade Organization.

Boeing and Airbus have each charged the other with benefitting from government subsidies which violate free trade agreements. Airbus says Boeing's research for the Defense Department is a subsidy; Boeing says it's simply delivering services to the government under contract.

Airbus also complains tax incentives given Boeing to locate or retain plants and jobs in Illinois, Kansas and Washington amount to government subsidies, and that government aid to Boeing cost Airbus $27 billion between 2004 and 2006.

Boeing counters that Airbus has been given so-called government loans it was not required to pay back, the equivalent of receiving a total of $205-billion from EU governments.

The WTO hears only cases brought by member governments -- so officially, this matter is between the US and EU. Both Boeing and Airbus parent EADS have said they'd like to settle the dispute, but it's out of their hands.

Thomson Financial cites a report from the French Press Agency, which in turn says it was told by Robert Novick, a lawyer from Boeing's Washington law firm, WilmerHale, "I would be surprised that we see a negotiated settlement before the ruling against Airbus is issued."

A new round of hearings began on Tuesday at the WTO headquarters on the EU's complaint. A ruling from the WTO is expected this fall, six months after the Boeing case is resolved. Both complaints were filed in 2004.

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