U.S., Europe In Airbus Fuss
U.S. trade authorities said Wednesday they will file a complaint against the European Union to the World Trade Organization, contesting what they regard as billions of dollars in unfair subsidies provided to aircraft company Airbus SAS by European governments.
Only hours later, the European Union announced a countersuit against the United States regarding subsidies to Boeing.
The dispute involves two large aircraft companies — Chicago-based Boeing Co. and Toulouse, France-based Airbus. They compete in a wide range of civilian and military aircraft markets, and Airbus over the past decade has supplanted Boeing as the world's biggest aircraft manufacturer.
The United States and EU agreed in 1992 on a deal that limited subsidies for the world's two largest airplane makers to 33 percent of the production costs for new models.
Boeing has long been frustrated that Airbus has continued to get government money to help it develop new planes such as the A380, even though it has become Boeing's commercial equal in recent years. Last year, Airbus delivered more planes than Boeing for the first time and will do so again in 2005.
The Office of the United States Trade Representative announced the action, saying that recent negotiations between the two countries failed to resolve the dispute.
"This is about fair competition and a level playing field," U.S trade representative Robert Zoellick said. "Since its creation 35 years ago, some have justified subsidies to Airbus as necessary to support an 'infant' industry. If that rationalization were ever valid, its time has long passed. Airbus now sells more large civil aircraft than Boeing."
The U.S. complaint touched nerves on the other side of the Atlantic.
Experts had speculated that a U.S. complaint would probably trigger the European Union to file a counter complaint with the WTO about what it says are indirect subsidies to Boeing — including tax breaks of more than $3 billion that Washington state has promised Boeing to build its planned 7E7 jetliner in Everett, Wash.
The Airbus-Boeing Dispute is just one of several trade tiffs between the United States and Europe.
World Trade Organization arbitrators in August authorized the European Union and other leading U.S. trade partners to impose sanctions against the United States in response to antidumping rules.
The EU also threatened to impose sanctions on products from U.S. states that are key in the 2004 election unless the Bush administration dropped special protections for the American steel industry. President Bush scrapped the steel tariffs last December, 21 months after imposing them.
A U.S. export subsidy has been ruled a violation of global trade rules by the WTO, and as long as that subsidy remains in place, Europe is imposing penalty tariffs on 1,600 U.S. manufactured goods and farm products exported to Europe.