CAL's plane selection upsets EU

The EU trade chief has sent a letter to Premier Yu Shih-kun expressing concerns that pressure from the US government imposed on the China Airlines aircraft purchase may violate WTO rules, the Taipei Times was told yesterday.

The letter signals the first retaliatory gesture from the EU after a week of heavy US lobbying of China Airlines and top government officials to reverse the carrier's apparent decision to select European-produced Airbus SAS jets over US-produced Boeing aircraft.

"Pascal Lamy in the personal letter addressed to the premier said the EU was told that the pressure from the US side may violate WTO-related rules," a reliable government source told the Taipei Times.

"His letter was aimed at cementing the EU's strength in the case, apart from continuous lobbying efforts by the four European countries," the source said.

The four European countries are France, Germany, Spain and the UK, which constitute the Airbus European consortium. Taipei-based top representatives from the four countries, however, either declined to comment on the issue or were not available yesterday.

The Ministry of Foreign Affairs passed the letter to the Executive Yuan earlier this week after receiving the note from Taipei's representative office in Brussels, sources said.

The WTO rules that Brussels referred to appear to be Article Four of the agreement on trade in civil aircraft under the WTO umbrella.

Article 4.2 of the agreement stipulates the following: "Signatories shall not require airlines, aircraft manufacturers, or other entities engaged in the purchase of civil aircraft, nor exert unreasonable pressure on them, to procure civil aircraft from any particular source."

Such a move, the article continued, would "create discrimination against suppliers from any Signatory."

Article 4.1 also said purchasers of civil aircraft should be "free to select suppliers on the basis of commercial and technical factors."

But Rupert J. Hammond-Chambers, president of the US-Taiwan Business Council, told the Taipei Times yesterday that huge aircraft sales always involve a host of complex political issues.

"This is more than an equipment sale. These transactions are seen as a litmus test on a country's relationship and are very closely watched by policy makers in Washington," said Hammond-Chambers.

He also pointed out the irony of China Airlines, operated by a quasi-government foundation, passing over jets from Boeing, an icon of American industrial might, while at the same time the Taiwan government eagerly pursues a free trade agreement (FTA) with the US.

"How does President Chen [Shui-bian, 陳水扁] and his administration expect to make a compelling case for an FTA with the US, if at the first opportunity it has to demonstrate its commitment to this relationship, it buys French," he added.

Boeing is a member of the US-Taiwan Business Council.

Meanwhile, the US de facto ambassador to Taiwan, Douglas Paal, visited the premier yesterday, although Cabinet Spokesman Chuang Suo-hang (莊碩漢) said the China Airlines case was not discussed during the meeting.

"The meeting lasted for 12 minutes. Paal didn't mention the word `Boeing' or the word `airplane' whatsoever," Chuang said.

"He was here to express his sincere support for the premier's first transit in the US," Chuang added. Yu is slated to depart for Taiwan's allies in Central America on Monday, and is scheduled to make a two-day stopover in New York city.