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Thu, Nov 15, 2007 - Page 10 News List

US, Europe take sides in Boeing, Airbus brouhaha


The US and Europe, embroiled in perhaps the biggest commercial dispute ever, may be unable to reach a settlement on government support for rival plane makers Boeing Co and Airbus for another two years, or even longer, the EU trade chief said on Tuesday.

Peter Mandelson told the European Parliament in Strasbourg, France, that several "good faith attempts" have failed to resolve the trans-Atlantic impasse over alleged plane subsidies, which are being investigated by two WTO legal panels and tested relations between the two commercial giants.

"The US has denied there are any subsidies provided to Boeing, while at the same time demanding as a precondition that the EU put an end to European support to Airbus," Mandelson said. "You will appreciate that on this basis it has not been possible to establish a fair and balanced basis for a negotiated settlement."

The dispute, expected to be the most complicated and costly in the WTO's 12-year history, rests on the ability of Washington and Brussels to show that the alleged subsidies have harmed their industries. Both have presented evidence of lost plane sales or lowered prices to back up their claims.

Globally, the market for planes is worth an estimated US$3 trillion over the next two decades.

The office of the US Trade Representative said it was still hoping for a negotiated settlement that eliminates all WTO-inconsistent subsidies.

"Meanwhile, we remain confident in a favorable outcome through litigation," spokeswoman Gretchen Hamel said.

Mandelson said the differences between the two sides have been too big to resolve and that he was "skeptical whether this dispute can be resolved at the negotiating table any time soon."

The US accuses Airbus of taking advantage of decades of European subsidies worth the equivalent of up to US$205 billion to capture long-standing Boeing customers and become the world's largest seller of planes.

The EU, meanwhile, refers to tax breaks, development funding and outright grants to Boeing as examples of wrongdoing by the US government and the states of Illinois, Kansas and Washington. It also accuses the US of providing hidden support to Chicago-based Boeing through military contracts, citing a total subsidy figure through 2024 of US$23.6 billion.

An interim ruling in Washington's WTO case against Brussels was scheduled for last month, but has been delayed probably until early next year. A decision on the EU's complaint is not expected until the middle of next year. Both would be subject to appeals.

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