EU/USA deadlocked over A350 aid versus 787 support
European Union and US negotiators are holding out little hope of a last-minute deal to avoid a trade war in the dispute over subsidies for Airbus and Boeing. Speaking in Hungary last week, US deputy secretary of state Robert Zoellick indicated the 90-day negotiating window agreed in January was likely to close on 11 April without an agreement to end subsidies on large civil aircraft.
"From my last conversation with [European trade] commissioner [Peter] Mandelson, I do not see that as probably reaching the fulfilment in the time that we set," said Zoellick in Budapest. The USA would be willing to maintain the standstill on litigation and new subsidies beyond 11 April, he said. If the standstill is not extended, Europe will be free to provide launch aid for the Airbus A350 and the USA to restart its World Trade Organisation case against the EU.
The US side is resisting an EU attempt to forge an initial agreement on subsidies for the competing A350 and Boeing 787. Reports say the EU is willing to cut A350 launch aid if the USA guarantees that Kansas and Washington states will cut their subsidies for Boeing.
The US manufacturer says it has not taken up the Kansas offer of a $500 million bond issue to finance the 787 programme, and has no plans to, while Washington says its tax break applies to all the commercial aerospace industry in the state, including Airbus suppliers – and has been offered to EADS North America as part of bids by Everett, Moses Lake and Spokane to land a potential Airbus KC-330 tanker modification and assembly plant.
Embraer chief executive Mauricio Botelho, meanwhile, has launched a pre-emptive attack on rival Bombardier's plans to raise C$700 million ($580 million) of the C$2.1 billion development cost of the planned CSeries small airliner through government launch aid. Arguing the Embraer 170/190 family has been developed without "one cent of government money", he says: "After six years of fighting between Brazil and Canada at the WTO we are very concerned about the issue of subsidies." Bombardier chief executive Laurent Beaudoin says CSeries funding would be compatible with WTO rules.
GRAHAM WARWICK/WASHINGTON DC
Source: Flight International
