Fri, Aug 22, 2003 - Page 1 News List

CAL buy from US may have `major impact' EU says


The European Commission expressed concern yesterday over a reported decision by China Airlines (CAL) to buy aircraft engines from a US rather than European producer, warning the deal could have a "major impact" on Taipei-EU ties.

The EU executive cast doubt over whether the CAL decision was being made on entirely commercial grounds, and said it was seeking clarification from Taiwan over the deal.

"We are concerned about the decision-making process concerning the placing of the order for these engines. We are not certain that the decisions were taken purely on commercial grounds," said commission spokesman Michael Mann.

"This decision, going against a European producer, could have a major impact on relations between the European Union and Taiwan. We're quite concerned and we want clarification from the Taiwanese side," he added.

He noted that Taiwan was bound by an agreement on the General Agreement on Tariffs and Trade (GATT) saying such deals should be made only on the basis of competitiveness on price, quality and delivery terms.

"So we are concerned," he said.

Britain's Rolls Royce has reportedly lost a bid to its US rivals to supply US$600 million to US$800 million worth of engines to CAL, which awarded the contract to General Electric and Pratt and Whitney of the US.

Newspaper reports last week said that Rolls Royce lost the deal to supply the engines to CAL's 18 new passenger aircraft after a political tug-of-war between the US and Britain.

An airline spokesman, however, said the deal had not been finalized.

The Brussels commission indicated that there was still some hope the deal could be won by Rolls Royce.

"We have been putting a bit of pressure.

"We've sent a number of letters to our Taiwanese counterparts over the past few months

"And we just hope that they will see fit to go for a better offer both technologically and commercially," the spokesman said.

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