Airbus: Europe and USA should negotiate WTO subsidies settlement

Washington DC
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Airbus’s top executive in North America has called on Europe and the USA to negotiate a settlement to their World Trade Organisation dispute over subsidies for large commercial aircraft.

“We are going to have to negotiate anyway, so why not start now?” Airbus North America chairman Allan McArtor told a press conference in Washington DC on 18 October.

A WTO panel is expected to rule in the US case against Europe on launch aid and other subsidies for Airbus late this year or early in 2008, while a separate ruling is expected by mid-2008 in the European Union case against the USA on research and development funding and other support for Boeing.

Europe says it would really rather negotiate. Boeing and the US Trade Representative say they would really rather negotiate,” said McArtor. ““The WTO will play out and we will end up negotiating something,” so Airbus and Boeing should make the first move towards a settlement, he suggested.

“We should start by agreeing what is acceptable government support between us [Airbus and Boeing] first, so we can then provide meaningful guidance to our [European and US] trade representatives.”

McArtor stressed his call for negotiations was “not a sign of weakeness in our WTO case. Europe feels it has strong defensive and offensive cases. But we know we will end up negotiating, so why not start now?”

Airbus and Boeing “need to take a deep breath and recognize that competition is a good thing, and recognize that this trade battle is a resource-consuming feud”, he said. “We need to embrace the long-term benefits of competition and the role that public-private partnerships play in this industry.”

McArtor acknowledged the important role European government launch aid has played in Airbus product development, but argued that US government research and development funding has been instrumental in the development of Boeing airliners.

Government support is “part of the DNA” of the industry, he said, and to believe that competitive aircraft development “could take place without public-private partnerships is a fantasy. We need some recognition, some negotiation of what is a fair and balanced basis for competition.”

McArtor says Europe and the USA should negotiate a replacement for their 1992 bilateral agreement on large civil aircraft (LCA), which established limits on government support for product development. The USA unilaterally withdrew from the agreement in 2004 to launch its anti-subsidies case in the WTO.

Any new agreement would likely also be bilateral, he said, but would have to govern support for risk-sharing partners in third-party countries and also consider potential competition from China, India and Russia.