US Reject Airbus ‘Gesture’

7th Oct 2005

Yesterday Airbus launched construction of the new A350, a mid-sized airliner to rival Boeing’s 787 Dreamliner, and the bitter transatlantic trade dispute over aircraft subsidies was immediately re-ignited.As a part of the announcement Airbus shareholders gave the go-ahead to build the new jet without firm
funding pledges from EU governments. This was described as an olive branch, extended to Washington to open further discussion on the trade stand off.

The response was less than positive. Christin Baker, spokesperson for U.S. Trade Representative Rob Portman’s office said Washington could “take no comfort
from any offer to postpone the actual payment of the
launch aid these countries have already promised to

She added: “It is clear that the EU countries are unwilling to stop subsidizing Airbus. Therefore, we will continue to push ahead with our WTO case.”

Boeing themselves added in a statement, “Today’s actions are nothing less than the Airbus partner governments committing launch aid to yet another subsidized airplane, even though senior Airbus executives have repeatedly said their company has the funds to develop the A350 without launch aid.

Launch aid is a prohibited, market-distorting subsidy that is unique to Airbus. Launch aid is above and beyond the other forms of government support Airbus already receives—tax relief, government-sponsored R&D, and government-paid infrastructure projects. A permanent and complete end to launch aid is necessary to ensure free and fair competition in the large commercial airplane market.”


Reaction to the US comments was equally forceful. Trade Commissioner Peter Mandelson’s spokesman, Peter Power insisted that no government aid has been promised and emphasised the significance of this stance. “We clearly have moved substantially on this,” he said. “But is there a U.S.will to engage?”

Power then added: “In these circumstances, and given the continuing subsidies available to Boeing for the
launch of the 787, the statement of the USTR is

Last year Washington tore up a 1992 pact on aircraft subsidies and filed a complaint against EU government funding for Airbus jet programs to the WTO. Brussels then retaliated with a countersuit citing U.S. and overseas tax breaks and research subsidies for Boeing.

In an interview this morning on BBC Radio 4’s Today programme Paul Everitt, Director of Communications for the SBAC, an organisation which represents UK suppliers to the air transport industries, was celebrating the launch of the Airbus project. He also attempted to put some perspective on the debate “All governments provide support” he said, “The difference between what happens in the US and here in Europe is the situation is rather more transparent, particularly in the UK where we can see exactly how much money is being provided to a company.” Judging from today’s comments it seems unlikely that his American counterparts will accept this view or even come to the table to discuss it.



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