The European Union and United States edged closer to a World Trade Organization showdown yesterday as plane maker Airbus said it hoped to...
LONDON — The European Union and United States edged closer to a World Trade Organization showdown yesterday as plane maker Airbus said it hoped to win controversial funding from four European governments for its new A350 plane, a rival to Boeing’s 787.
Airbus’ British division, which makes wings, submitted a request for aid to the U.K. government last month and expects a decision by mid-June, said Howard Berry, a spokesman for the plane maker in Bristol, southwest England. Airbus — owned 80 percent by top European aerospace company European Aeronautic Defence & Space and 20 percent by Britain’s BAE Systems — also asked for loans from France, Spain and Germany, said Berry, who declined to say how much money Airbus is seeking.
Washington warned it could resume a World Trade Organization (WTO) case aimed at getting the government loans declared illegal under world-trade rules.
“Our position is clear — no new subsidies,” said Neena Moorjani, a spokeswoman for the U.S. Trade Representative’s Office.
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The United States and the EU suspended competing WTO cases over government aid for Airbus and Boeing in January in the hopes of reaching a negotiated settlement. They failed to achieve that by an April deadline.
Washington would prefer to negotiate an agreement that eliminates aircraft subsidies, Moorjani said. “However, if additional subsidies are committed, we have said we will resume litigation through the WTO,” she said.
A mid-June decision on the U.K. loan request would coincide with the Paris air show. The industry’s largest gathering usually sees manufacturers announce deals worth tens of billions of dollars.
Airbus has estimated it will cost $3.8 billion to develop the A350, and Chief Executive Noël Forgeard has said it was likely to ask for up to $1.3 billion in repayable state loans from European governments.
EU officials said negotiations with the United States to avert a trade war were still under way.
“The Commission is still in discussion with the United States, and therefore no doors are closed,” European Commission spokeswoman Francoise Le Bail told a news briefing.
Airbus’ bid for funding for the mid-sized A350 comes as it looks to counter Boeing’s new 787, due in 2008. It also comes as Airbus winds up a $15.2 billion program to develop the mammoth A380 double-decker, which is set to enter service late next year.
“Boeing strongly opposes launch aid for the A350 and firmly supports U.S. government efforts to end this market-distorting assistance, both for the A350 and for Airbus aircraft overall,” Boeing spokesman Dick Dalton said in Washington.
Information from Reuters and Bloomberg News is included in this report.