The USA IS to seek "consultations" with the European Union (EU) over the French Government's funding support of Sextant Avionique for development of a new flight management system (FMS) for Airbus aircraft.
If the talks fail to resolve the dispute, the US Government plans to ask the World Trade Organisation (WTO) to rule whether the aid to the French avionics manufacturer constitutes an illegal subsidy. This process could take up to a year.
Incumbent Airbus FMS supplier Honeywell has been pushing for action since late 1997, following the French Government's decision to grant Sextant a Fr140 million ($22.58 million) repayable loan towards development of an advanced FMS in a joint effort with Smiths Industries.
The US company has filed an action in the European courts to challenge the subsidy. Honeywell says: "We're pursuing various avenues and hope to resolve this through conciliation [at the WTO]. Our objection is not to competition, but a violation of the WTO's rules on fair play."
The US Trade Representative is concerned by comments made by the European Commission (EC) when it approved the French subsidy . "The EC made it clear that it approved the funding with the purpose of displacing a US supplier," says a senior official.
The USA emphasises its action is not related to previous disputes over subsidies for Airbus, although it initially tried to resolve the issue under the 1992 agreement which limits state aid for large civil aircraft development. "The EC said it was not a product covered by that agreement," the official says. "They acted as though it was a fait accompli. We had to take this action to get their attention."
Honeywell Space and Aviation Control president Don Schwanz says: "The issue is about making sure WTO rules are followed."
Honeywell supplies FMS units to Sextant for integration into its Airbus flight management and guidance systems - for which the French company is sole supplier. Sextant and Smiths' US arm are developing an FMS in competition with Honeywell.
Source: Flight International
