Airbus says rival's 7E7 workshare deal could break rules

Airbus has turned the tables on its US rival by questioning whether the structure of Boeing's partnership agreement with Japanese industry for the 7E7 would breach World Trade Organisation (WTO) rules on government subsidies. Three years ago, US trade representatives threatened to complain to WTO about the level of government launch funding for the A380 programme.

Last month, Boeing unveiled the workshare packages for the 7E7, which will see a Japanese consortium including Fuji Heavy Industries, Kawasaki Heavy Industries, and Mitsubishi Heavy Industries being awarded contracts representing about 35% of the aircraft's airframe components. Packages include part of the fuselage, the wings and landing gear.

Speaking to Flight International at last week's Dubai air show, Airbus president Noel Forgeard questioned whether the Japanese financing was in fact a subsidy, and says he wanted to ensure that the European Union is fully aware of the arrangement with Boeing. "We are gathering information to raise the level of awareness for the EU to decide," says Forgeard. "We want them to make their own judgement. The Japanese are 'risk-sharing partners'. Will it be risk-sharing if they are backed by Japan's government?"The 1992 European-US bilateral Large Commercial Aircraft (LCA) agreement limits direct government support to 33% of the development cost. A wider, more stringent subsidies regulation was adopted by the WTO in 1994, and it was this that the US government insisted that Airbus comply with for the A380.

Legal specialists say the EU would not have a case under the LCA bilateral, but potentially could pursue the issue with the Japanese government (but not the US government) under the terms of the 1994 agreement. However, they add that to bring a successful case the EU would have to first demonstrate that providing Japanese government subsidies to the three companies has caused "injury" to the EU and specifically Airbus. Since the 7E7, if launched, is not expected to enter service until 2008, it is thought that Boeing will say that injury claims cannot therefore be determined until some time after this date.

Boeing says: "It is ironic that EADS and Airbus are concerned about the potential for financial support from the Japanese government for Japanese manufacturers when the EU and EADS have no qualms about providing tens of billions of dollars in subsidies to Airbus for more than 30 years." It adds that under the LCA agreement, Boeing "is not allowed to seek US government aid for the 7E7. We are seeking risk-sharing partners, and how they fund that is up to them."


Source: Flight International