Negotiations to Continue

The United States and the European Union plan to continue talks past an April 11th deadline and avoid going back to WTO litigation. The ongoing dispute over aid to aircraft manufacturers has been heated.

"Both sides should now pause for further thought and review the situation," said EU Trade Commissioner Peter Mandelson said in a statement on Saturday according to a Reuters report. He expressed regret that no deal had yet been reached, but was not surprised because the issues are complex.

In March, the US accused the EU of attempting to broaden the Jan 11th talk terms to include Japanese support of Boeing and some tax benefits that the World Trade Organization has frowned upon. Both sides had agreed to negotiate a subsidy elimination deal by April 11th, in lieu of continuing WTO litigation.

"The United States continues to believe that such an agreement would be a useful solution to this important issue, and remains prepared to negotiate on the basis of the January 11 agreement, including the 'standstill' on subsidies," said Richard Mills, a spokesman for the US trade office. "In the event that the EU proceeds with additional subsidies for Airbus large civil aircraft, the United States will return to WTO dispute settlement."

The main objective of the US negotiators is to eliminate new loans that unfairly help Airbus development. The A380 program received more than $15 billion in loans for its development from EU member nations, and both Boeing and the US Trade Office are trying to prevent government loans from going to develop the Airbus A350, designed to compete with the Boeing 787.

"The EU remains interested in reaching an initial agreement that reduces the levels of government support in the sector and completing a comprehensive agreement in the longer-term. I stand ready to continue negotiations," said Mandelson.

FMI: www.ustr.gov