Airbus CEO Forgeard calls A350 launch delay a 'clever contribution' to settling subsidies dispute by negotiation
There is a new deadline for a deal between the European Union and USA over subsidies for large commercial aircraft, with the Airbus shareholders’ decision to delay industrial launch of the A350 to September.
“We could have launched now, but if we confirm only in September it is because we want to give them more time for a negotiated settlement,” says Airbus chief executive Noel Forgeard. The company has enough commitments to go ahead with the A350 and could use its cashflow to finance the programme, he says, but considers the delay a “clever contribution” to settling the dispute.
On 13 June, the USA and EU blocked each other’s requests to establish dispute settlement panels at the World Trade Organisation (WTO), but this is routine and the trade body is expected to move ahead after a second round of requests on 23 June. Both sides continue to say they prefer a negotiated settlement.
There is significance to the September date beyond providing another three months to negotiate a settlement. The USA withdrew from the bilateral Large Civil Aircraft (LCA) agreement governing subsidies last October, but Forgeard makes clear he considers a September launch “within the validity period of LCA to 5 October” because one year’s notice of withdrawal is required.
Industry insiders also point out a September launch would likely come after US Congress has voted on the Bush administration’s 2006 budget, reducing the chance of legislation being enacted that would bar Airbus from bidding for US Air Force tanker orders unless the WTO dispute is resolved.
Airbus is recommending the EU push for six things in negotiations, including that the USA put all subsidies on the table, particularly Washington state tax breaks; a ban on Japan’s support for Boeing; grandfathering of previous subsidies; an equitable agreement on A350 and 787 aid; and making it unacceptable for the USA to close military contests to foreign suppliers while a WTO dispute is active.
“We are willing to put everything on the table, but everything means everything,” says Airbus executive vice-president for government relations Philippe Delmas. The EU demand that the US “put something on the table” in exchange for abolishing launch aid is “the crux of the case”, says Boeing chairman Lew Platt, adding: “We are not going to put anything on the table. We don’t have any quid pro quo.”
If there is no progress, Airbus vows to go ahead with the A350. “The A350 will never be taken as a hostage of the WTO case – never,” says Forgeard. “We have the money with our own cash flow…this does not mean we will spit on anything that will be agreed between the EU and the USA.”
Source: Flight International
