Move thought to be delaying tactic as WTO begins task of establishing panels to investigate subsidies dispute
The European Union has blocked a US request to reveal all details of government support given to Airbus, after the World Trade Organisation (WTO) established panels to investigate the subsidies dispute. Sources suggest the move is a delaying tactic to give the European side time to get its defence together.
Portraying establishment of panels as a “routine” step in the rival trade disputes launched by both sides, the European Commission and US Trade Representative say they are still prepared to negotiate in parallel with the WTO probe. No talks are under way, however.
The composition of each three-person panel of legal experts must be unanimous and is unlikely to be agreed before October, a WTO source says. Meanwhile, Annex Five of the WTO subsidies agreement sets out an initial information-gathering phase, which requires full disclosure of support provided to both companies.
Both the USA and EU applied for the Annex Five process to be followed, but the European side has said it will not comply with the US request, essentially blocking the process. “The defending country [or bloc] has to submit full data on all subsidies it is providing, so it’s like opening up the skeleton closet,” says the WTO source.
A senior source within EC trade commissioner Peter Mandelson’s office says the decision was taken to block the information-gathering process after talks last week with trade ministries from each Airbus country. A source close to the UK negotiating team says Mandelson was exasperated at the lack of a unified front among the Airbus ministers. The delay could give the Europeans time to regroup under a common position before the end of the year, the source adds.
Insiders say the European negotiating team was surprised by the difference in approach to subsidies that each European country has, as revealed in documents uncovered by Boeing detailing local government subsidies for runway upgrades, facility construction and infrastructure improvements. Mandelson is understood to have demanded that each state gives the EC a breakdown of all payments before he resumes talks with his US counterpart.
The European refusal to comply with the Annex Five process is understood to hang on linguistics; the wording defending countries “shall” comply has an optional notion in French, but a definitive notion in English. This argument is unlikely to survive analysis by the disputes panel when it is established, says the WTO source.
JUSTIN WASTNAGE/LONDON
Source: Flight International
