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Mon, Mar 21, 2005 - Page 12 News List

Boeing-Airbus talks on subsidies should resume, EU says

DIALOGUE NEEDED The EU pushed for both sides to openly discuss mutual charges that the other side has been unfairly given billions in support

BLOOMBERG

The EU called for the resumption of talks with the US about government aid to plane makers Airbus SAS and Boeing Co, a day after the US said discussions to settle the trade dispute had collapsed.

"I regret this unilateral action in breaking off the negotiation; it is premature and unnecessary," EU Trade Commissioner Peter Mandelson said in a statement read today by a spokeswoman in Brussels. "I fully understand the difficulties, but I think we could have overcome them with further effort." The US contends European governments have broken trade rules by giving more than US$15 billion in government loans since 1967 to Toulouse, France-based Airbus. The EU says Chicago-based Boeing has benefited from as much as US$23 billion of unfair support since 1992 in the form of state tax breaks, military research contracts and Japanese assistance to suppliers.

Mandelson said the appointment of a new US trade representative may bring impetus to the talks. President George W. Bush two days ago nominated Representative Robert Portman to replace Robert Zoellick as the US's top trade negotiator.

"I am happy to return to the negotiating table and perhaps the new US trade representative will look at that," Mandelson said in the statement.

The US blames the EU for halting talks yesterday by seeking concessions not covered in the Jan. 11 agreement, in which the sides pledged to freeze aid for 90 days while seeking a longer-term accord eliminating support for aircraft makers.

"This was a table that was set, and the EU keeps wandering away from the table," Richard Mills, a spokesman for the US Trade Representative, said in a telephone interview from Washington today.

Airbus overtook Boeing in 2003 to become the biggest manufacturer in the world's US$50 billion airliner market. The US says Airbus's growth indicates there's no more need for aid that was once justifiably given to a startup industry. Founded in 1970, Airbus has cut Boeing's share of the market to 48 percent from about 73 percent as of 1993.

The US and EU in December decided to try for a settlement of the aircraft issue outside the World Trade Organization, a bid to avoid bruising their US$400 billion-a-year trade relationship, the world's largest. The two sides disagree on other issues including US tax breaks for exporters, EU customs rules and resistance to genetically modified foods in the 25-nation bloc.

The EU is pushing for an interim accord to reduce government financing for development of Airbus planes in exchange for cutting Boeing's benefits in order to meet the April 11 deadline.

The two sides could then start negotiations at a later date to eliminate remaining support.

The US is willing to consider a two-stage approach, Mills said today.

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