EU, US hit turbulence at aircraft subsidies talks

A new trade conflict is about to kick off
between the EU and the US as the two sides have failed to reach
agreement on subsidies to Airbus.

The EU and the US moved closer on 30 September to a
new trade war over the subsidies they give to rival
aircraft producers. The talks between the EU and the US
have been focussed on renegotiating a 1992 transatlantic
accord in order to reach agreement on restraining
government subsidies to aircraft producers Airbus and
Boeing. However, no progress has been made after two
rounds of talks. 

Since the negotiations have effectively broken down,
the US looks set to launch a case with the World Trade
Organisation aimed at terminating government subsidies to
the European aircraft maker Airbus. According to US Trade
Representative Robert Zoellick, “we think these subsidies
are unfair and we will pursue all options to end these
subsidies – including bringing a WTO case, if need
be”.

In return, the EU warned the US
Congress on 30 September that it would refuse to lift its
escalating trade sanctions in other pending cases against
American companies if Washington chooses to launch a WTO
case and would aggressively counter any US case.

The Financial Times has cited several
EU and Airbus officials as saying that the US appears
determined to launch a WTO case to help bolster President
Bush’s election prospects in several key US states where
Boeing is a big employer. 

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