WTO battle edges closer as trade commissioner touts potential A350 launch aid cut

European trade commissioner Peter Mandelson says that Europe is prepared to cut Airbus A350 governmental launch aid if a funding settlement is reached with the USA, as time runs out to reach a transatlantic agreement.

Mandelson bigThe European Union and US government have both filed claims with the World Trade Organisation (WTO) requesting an investigation into direct and indirect financial support for Airbus and Boeing.

This prospective WTO battle is edging closer following the appointment of a senior Mexican trade official to head the WTO’s forensic investigation of the alleged subsidies.

“If it’s possible to restart negotiations, I am prepared to do so,” says Mandelson.

He says that any agreement could have an effect on European support for programmes such as the A350, adding that government funding would “have to adapt to the outcome of those negotiations”.

Mandelson’s comments are widely being seen as a last-ditch effort to avoid WTO action. A decision on A350 launch aid is imminent with four European governments expected to announce by mid-October a commitment to fund up to one-third of the €4.3 billion ($5.2 billion) investment for the new aircraft programme.

But such a commitment stands to jeopardise a possible negotiated outcome with the US government.

New Airbus chief Gustav Humbert says he would prefer a negotiated solution to the trade dispute to avoid damaging and protracted litigation, adding that Airbus could launch the A350 aircraft programme without aid provided an acceptable agreement on subsidies was reached.

“[Mandelson] remains open to a negotiated solution provided it is credible in terms of the disciplining of subsidies that Boeing receives,” says the European trade commission.

“He has consistently said he wants a negotiated solution rather than litigation. The reality is that should the formal negotiations be concluded, the EU may have to reassess aid given to the A350 project.”


Source: Flight International