Boeing/Airbus

[Eubulides <paraconsistent@xxxxxxxxxxx>]

http://quote.bloomberg.com/apps/news?pid=10000006&sid=azEsFaa8IsOo&refer=home
EU, U.S. Talks on Boeing, Airbus Collapse, Setting Up Trade Row

March 18 (Bloomberg) -- Talks between the European Union and U.S. on how to
settle a dispute over government aid to airplane makers Airbus SAS and Boeing
Co. collapsed today, the U.S. said.

``Although on Jan 11., the EU agreed to a negotiating structure for eliminating
large civil aircraft subsidies, over the last two months they've been
backtracking and seeking to change the agreements of their terms,'' said Richard
Mills, a spokesman for the U.S. Trade Representative in Washington.

The breakdown means the potential resumption of what had been the biggest case
in the World Trade Organization's history.

The U.S. filed a complaint at the WTO on Oct. 6, claiming that more than $15
billion in government loans to Toulouse, France-based Airbus amounted to illegal
subsidies under global trade rules. The EU countered, saying Chicago-based
Boeing has benefited from unfair support of as much as $23 billion.

The two decided in December to settle their differences outside the trade body
in order to avoid litigation and preserve the $400-billion-a-year trade
relationship between the U.S. and EU. That trading partnership, the world's
largest, is already marred by friction over U.S. export tax breaks, an EU
moratorium on genetically modified foods and European customs procedures.

In a memo detailing a Sept. 16 meeting with the U.S., the EU said the WTO would
probably rule aid to both Airbus and Boeing illegal. Litigation at the
Geneva-based trade body may bring ``mutually assured embarrassment,'' the memo
said.

Most complaints at the WTO, set up on Jan. 1, 1995, as a successor to the
General Agreement on Tariffs and Trade, are resolved without the need for
arbitration.

Subsidies

The Bush administration has charged Airbus received more than $15 billion in
loans since 1967. The EU alleges Boeing has gotten $23 billion through
state-level tax breaks, military research assistance and Japanese aid to
suppliers since 1992.

Boeing and Airbus are the only two manufacturers of large commercial jetliners.
Boeing, which controlled about 73 percent of the market in 1993, has seen its
share erode to 48 percent. Airbus sold 305 aircraft in 2003 compared with
Boeing's 281, and the U.S. says government aid to Airbus that was once justified
to help an ``infant industry,'' is no longer needed.

Airbus overtook Boeing in 2003 to become the leader in the $50 billion-a-year
airliner market. Airbus is now working on an A350 jet to undercut Boeing's
planned 250-seat 7E7 jetliner that will be introduced in 2008.