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Wed, Mar 21, 2007

WTO Offers Glimpse Of Boeing/Airbus Subsidies Spat

Censored Broadcast To Be Aired Thursday

The general public will get a peek Thursday into the contentious dispute between the US and the European Union -- and their respective aerospace manufacturers, Boeing and Airbus -- over accusations of unfair funding practices and subsidies.

According to The Associated Press, the proceedings from the World Trade Organization hearing in Brussels, Belgium will air on closed circuit television Thursday. It will also be heavily censored, as many of the allegations are considered confidential.

As Aero-News reported, both sides expended considerably energies last year accusing one another of unfair government payments. The United States claims Airbus has benefitted from billions in illegal development financing and debt relief from the EU member states that comprise the EADS aerospace consortium.

On the other side, the EU says the US government provides tremendous hidden support to Boeing's commercial planes division, through many lucrative military contracts.

The actual meeting occurred Tuesday, and focused exclusively on EU government payments to Airbus, which US representatives claim allowed Airbus to undervalue its aircraft, and gave the company an unfair advantage -- one that allowed Airbus to overtake Boeing in the sales race in 2001.

Boeing has since reclaimed its sales crown... but the company says the principle remains.

"The damage that we've always been concerned about is ... the commercial risk that we take and the commercial risk that they don't take when it comes to subsidies," Boeing Commercial Airplane CEO Scott Carson said during Monday's conference call with analysts and reporters, on the status of the planemaker's 787 program.

"The absence of taking full commercial risk creates an unbalanced playing field, and that's always been the issue," Carson added.

Meanwhile, Airbus says Boeing has won the war, at least for now... so the battle no longer has merit. The EU plans to present its own allegations of government improprieties involving Boeing this week, including charges Boeing earns "unprecedented" subsidies from the state of Washington that allowed the company to accelerate development of its 787 and other planes.

The EU also maintains the amount of research funding Boeing earns from US government is 10 times higher that what Airbus receives.

As it stands, the WTO is scheduled to release its final report on the US case against Airbus on October 31, and its ruling on the Airbus vs. Boeing case in April 2008. Those dates aren't set in stone, however -- especially as both sides continue to make new arguments stating why one company has an advantage over the other.

Children, children... can't we all just get along?

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

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