Boeing Chairman Lewis Platt is holding to a hard line on the U.S.-EU trade dispute over aircraft subsidies. He wants rid of European government...
PARIS — Boeing Chairman Lewis Platt is holding to a hard line on the U.S.-EU trade dispute over aircraft subsidies.
He wants rid of European government launch aid for Airbus airplanes and he is dismissive of calls by Airbus Chief Executive Noël Forgeard to put everything on the table for discussion.
“We don’t have anything to put on the table to be the quid quo pro for launch aid,” he said in an interview at the Paris Air Show. “There is no such thing.”
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Platt agreed that political realities dictate that a settlement of the dispute is still the most likely eventual outcome. But it may not be possible.
“The business of how a compromise is reached is a tricky and very difficult one at this point,” he said.
The trade dispute is now pending in two separate cases before a World Trade Organization panel in Geneva. After the United States brought a case to stop government loans to Airbus, the European Commission countersued over support for Boeing.
Airbus and the Europeans argue that Boeing gets commercial advantage from U.S. government purchasing on the defense side; from tax breaks in Washington and other states; from Japanese government aid to Boeing’s partners in Japan; and from NASA and Department of Defense research projects.
Boeing and the United States respond that these things don’t balance. The spillover from defense to commercial is small and Airbus gets similar benefits, they argue. And they assert that tax breaks over 20 years cannot compare to risk-free, upfront loans that fund projects like the A380 superjumbo — which might never have gotten off the ground if the money had to be raised in the capital markets.
“The one thing that’s different is launch aid,” Platt said. The French, German, British and Spanish governments fund new Airbus airplane programs with multibillion-dollar loans that must be repaid only if the airplane succeeds.
This week at the Paris Air Show, Airbus’ Forgeard outlined the conditions he would accept for a settlement of the subsidy dispute. One requirement was that launch aid be grandfathered in for the A350 — the plane Airbus is developing and selling as a rival to Boeing’s 787.
But it’s widely believed that Boeing started the dispute last year precisely to stop Airbus from matching its 787 with a subsidized rival.
“Some compromises might be made to make a settlement,” Platt said. However, he added, “The U.S. Trade Representative is not going to have settlement discussions that allow launch aid.”
And Platt is not ready to agree to what Airbus wants.
For example, he’s convinced that the Washington state tax-incentive legislation that kept the 787 final assembly in Everett should and will remain.
Platt noted that four U.S. cities are now vying to offer incentives to Airbus majority owner EADS, which is soliciting bids for a site at which it would assemble an air-refueling tanker if it can get an Air Force contract.
He also said that Washington state’s tax relief is available to all companies in the aerospace industry, including Airbus suppliers in the state, so Boeing isn’t likely to forgo it.
Platt was aggressive in his attitude to the amendment pushed by U.S. Rep. Duncan Hunter, R-Calif., that seeks to bar EADS from U.S. contracts while it receives European government subsidies — a piece of legislation that drew fire from Forgeard on Tuesday.
Platt said that Boeing did not initiate or lobby for the Hunter amendment. But he didn’t seem to object to that definitively protectionist move.
“I don’t love an eye for an eye,” Platt said. “I like a level playing field. But members of Congress are angry. As an attention-getter it ought to be effective.”
Platt was also skeptical of Forgeard’s assertion Tuesday that Airbus delayed the launch of the A350 until September to give more time for settlement talks to work.
“Months have gone by without substantial talks,” he said.
Dominic Gates: 206-464-2963 or email@example.com