Trade Tussle
March 23, 2007
Boeing has benefited from billions in illegal state aid, the European Union said on Thursday, hitting back at the US in a tit-for-tat row at the World Trade Organisation (WTO) over plane subsidies.
"Boeing never had to pay back a cent," an EU official, who declined to be named, told journalists.
This is the first time that the EU has quantified the amount of disputed US support, executives at European aircraft maker Airbus said against a background of mutual recriminations over state aid.
The EU and US have been at loggerheads for years over charges and counter charges relating to state aid to Boeing in the United States and Airbus in Europe, and its compatibility with WTO fair-trading rules.
R&D aid
The EU estimated that the US administration had given Boeing $18.9 billion in the form of aid for research and development through NASA and US Defense sources, as well as tax relief from 1990 to 2004.
Several US states or cities also provided $4.8 billion, mainly to build infrastructure for Boeing, according to the EU submission.
The information emerged from a summary of written complaints by the European Commission to the WTO, fueling transatlantic bickering over subsidies or support for the world's two largest civil aircraft makers.
In 2004, the parties lodged reciprocal complaints at the WTO, which parallel dispute settlement panels are now examining.
American accusations
This week, the United States asserted that Britain, France, Germany and Spain had provided 15 billion dollars to Airbus to launch new products, according to a 72-page statement to the WTO panel released here.
The "resulting benefit" to the European aircraft maker "is well over $100 billion," a US official contended.
"Launch aid has enabled Airbus to launch a series of large commercial aircraft models at a scale and a pace that would have been impossible without subsidies," he said.
EU officials dismissed the $100-billion figure as "a smoke screen" and argued that state aid to Airbus, unlike the assistance provided to Boeing, must be reimbursed.
Airbus Senior Vice President Derek Sharples commented: "That's frankly laughable. They must have gone to Las Vegas and sat in front of a gambling machine to come up with a figure like that."
More tit for tat
The Europeans also argued that Boeing, which builds both civilian and military aircraft, was able to apply technology it developed with the help US army subsidies, such as night vision
equipment, to airliners.
"Boeing got it for free. Otherwise they could not have obtained these technologies without paying a lot of money for it," an EU official said
"The 787 is the most subsidized aircraft program ever," Sharples added, referring the US maker's next new airliner.
The United States in turn countered that the Europefan Union was trying to divert attention from its "massive" subsidisation of Airbus during the WTO's review.
"Although we have not had an opportunity to read the EU submission, based upon what we know about the EU's case, its claims in this dispute lack merit," said Gretchen Hamel, a spokeswoman for the US Trade Representative, on Thursday.
"Some of the US and state programs they challenge are not even related to civil aircraft. In other cases the programs are for publicly available research or are available to a broad range of companies -- including Airbus," she added in a statement.
The WTO is set to issue a preliminary ruling on the US complaint against Airbus in September. The EU suit targeting Boeing is to get a hearing in July, with a decision unlikely before February 2008.