The world was a different place in late 1980s, when the USA and European Union (EU) were negotiating on reducing direct government support for the development of large civil aircraft - the so-called "LCA agreement". Then, Boeing and McDonnell Douglas dominated the jet airliner market and benefited indirectly from massive US Government spending on military research and development.
Today, McDonnell Douglas no longer exists after being merged into Boeing, and Airbus Industrie has achieved parity in airliner orders with its US rival. The Pentagon's aerospace R&D budget has been cut to the bone and refocused on purely military technologies such as stealth. As a result, the US Government no longer considers the agreement signed with the EU in 1992 to be adequate.
Hard on the heels of Airbus' decision to offer the A3XX to airlines, US Trade Representative Charlene Barshevsky has asked the governments of the Airbus partner nations for details on the terms and conditions of any launch aid. Thirty per cent of the A3XX's $12 billion development costs will come from the governments of the Airbus shareholders.
So far, only the UK has announced plans to support development of the A3XX, pledging $830 million towards BAE Systems' share in the programme, but the other governments are expected to follow suit.
Airbus and the EU maintain A3XX launch aid will adhere to the terms of the 1992 bilateral LCA agreement, which limits direct government support to 33% of the development cost. The US Government argues any launch aid must also comply with wider subsidy rules adopted by the World Trade Organisation (WTO) in 1994.
Of the two, the WTO's rules are the tougher - and any doubts as to their applicability to aircraft were dispelled when it ruled Brazilian export financing and Canadian development funding for regional airliners to be illegal subsidies.
Nothing is expected to happen soon. But the US Government is increasingly convinced the 1992 agreement is not working, claiming efforts to renegotiate it have been rebuffed by the EU. It took a formal trade protest by the USA to produce LCA - it may take another to settle the subsidies dispute this time around.
Source: Flight International
