US Files WTO Complaint Over Airbus Subsidies

The time for talking is apparently over. The Bush administration has taken its case about EU subsidies to Airbus to the World Trade Organization, igniting what very well could be an aviation trade war.

The US and EU had been talking about how to address the billions of dollars in subsidies Airbus and its parent company, EADS, get for research and development of new aircraft lines, as well as the less overt subsidies Europeans say the US hands out to aerospace companies like Boeing. US Trade Representative Robert Zoellick told AFP he had been trying to convince the Europeans to stop the subsidies.

"But the EU and Airbus appear to want to buy more time for more subsidies for more planes," he said. "That isn't fair, and it violates international trade rules. Since we could not agree, the United States decided to pursue resolution through the agreed procedures of the multilateral trading system, by bringing a WTO case before an international dispute resolution panel."

Now, the US has decided to scrap the 1992 transatlantic agreement that allowed the European subsidies. "Consistent with today's decision to move forward with a WTO case, the United States also exercised its right, as provided by the 1992 agreement's terms, to terminate that agreement," Zoellick said.

If the US has its way, neither Airbus nor Boeing would get government subsidies. "That's a fair offer," he told AFP.

He also said talks aimed at finding a resolution would continue. "The United States remains interested in an agreement that ends all new subsidies. So as this case proceeds, we remain open to negotiating a new accord as long as it ends the new subsidies."

Both the EU and the US now have 60 days to start talks aimed at reaching a settlement on the subsidy issue. If that fails, the World Trade Organization will appoint a special committee to hear the complaint and make a ruling.

FMI: www.wto.org