http://news.ft.com/cms/s/ea4b2a3a-179b-11d9-9ac5-00000e2511c8.html US files WTO case against Airbus subsidies By FT Reporters Published: October 6 2004 14:43 | Last updated: October 6 2004 15:02
World Trade Organization & AirbusThe United States on Wednesday filed a World Trade Organisation complaint over what it called "unfair" European subsidies to aircraft manufacturer Airbus, the European rival of U.S.-based Boeing. "Since its creation thirty-five years ago, some Europeans have justified subsidies to Airbus as necessary to support an 'infant' industry. If that rationalisation were ever valid, its time has long passed. Airbus now sells more large civil aircraft than Boeing," US Trade Representative Robert Zoellick said. The EU immediately filed a counter-case at the WTO. "The US move in the WTO concerning European support to Airbus is obviously an attempt to divert attention from Boeing's self-inflicted decline," Pascal Lamy, EU trade commissioner said in a statement. "If this is the path the US has chosen, we accept the challenge, not least because it is high time to put an end to massive illegal US subsidies to Boeing which damage Airbus, in particular those for Boeing's new 7E7 programme." "Nonetheless, it is a pity that the US has chosen to go to litigation which could destabilize trade and investment, including in Boeing's 7E7 project. Aerospace workers can rely on the European Commission to defend their interests. " Hopes dwindled for a deal on the dispute last week, after a meeting on Thursday between EU Trade Commissioner Pascal Lamy and Zoellick on a number of bilateral trade issues, including US demands that European governments stop providing loans to help Airbus develop new aircraft. "We urged the EU to agree that neither of us should provide new subsidies to aircraft manufacturers. We offered to simplify our task by using the subsidy definition that the EU and the United States had already agreed to in the WTO. We even were willing to accept subsidies in the pipeline - but then draw the line. That's a fair offer," said Zoellick. "But the EU and Airbus appear to want to buy more time for more subsidies for more planes. That isn't fair and it violates international trade rules. Since we could not agree, the United States decided to pursue resolution through the agreed procedures of the multilateral trading system, by bringing a WTO case before an international dispute resolution panel." EU and US trade officials. Pascal Lamy, the EU's outgoing trade commissioner, warned senior members of Congress during his visit that the EU was prepared to link the aircraft dispute to a separate transatlantic fight involving US corporate taxation. The EU is currently imposing a tariff of 12 per cent on $4bn of US imports a year after Washington failed to lift a corporate tax subsidy, known as the Foreign Sales Corporation (FSC) scheme, that was ruled illegal by the WTO. That tariff will reach 17 per cent by March unless the US ends the subsidy. The US Congress is scrambling this week to pass legislation that would repeal the subsidy and replace it with other corporate tax breaks, but the bill would leave the FSC scheme in place for a two-year transition. Mr Lamy warned some member of Congress last week that if the US filed a WTO case against Airbus, the EU would refuse to lift the sanctions until that transition period ended. Boeing is among the largest beneficiaries of the FSC tax break. The European Union pledged to file its own case in response. "Our position, and we've said this time and again ... is, if there's a U.S. complaint there will be a European complaint," European Commission spokeswoman Arancha Gonzalez said.
