EU and US agree terms to end aircraft subsidies

EU and US trade negotiators have unveiled the terms of
negotiations to end subsidies to Airbus and Boeing, thereby putting
an end to an October 2004 WTO dispute.

EU Trade Commissioner Peter Mandelson and his US counterpart
Robert Zoellick have unveiled the terms of negotiations to end
subsidies to large civil aircraft manufacturers Airbus and Boeing.
The agreement, which came on 11 January 2005, marks the end of a
WTO dispute launched in October last year.

US Trade Representative Robert Zoellick welcomed the fact that
“for the first time […], the US and the EU have agreed that the
goal should be to end subsidies”. “There is much work to be done if
we are to be successful in negotiating an ultimate agreement, but
today does mark an important step in trying to end subsidies for
large commercial aircraft,” he said. 

In a statement, Peter Mandelson said Airbus is now “clearly
capable of competing in the global market place” without further
public financing.

Negotiations will last for three months, covering “the different
types of support affecting the sector in a balanced manner,
elaborating upon the scope of subsidies as defined by the WTO”, the
Commission indicated. No new government support for civil aircraft
can be granted during this period, which can be extended in the
event that the talks fail.

However, the Commission said that the detailed list of subsidies
covered by the negotiations will be “a difficult issue which will
be at the heart of the negotiations”. 
The agreement to end subsidies to large civil aircraft
manufacturers is meant to be broadened in the future to include
other countries with aircraft industries. It will be reviewed in a
year’s time to consider in particular if progress on this aspect is
“sufficient to prevent circumvention of [the agreement’s]
objectives and to justify its continuation”.

The dispute started in October last year when US Trade
Representative Robert Zoellick filed a complaint before the WTO,
accusing the EU of unfair trade practices for subsidising large
civil aircraft manufacturer Airbus. His action was
reciprocated on the same day by the then Trade Commissioner
Pascal Lamy, who challenged the US for illegal, hidden, subsidies
to Boeing (see EURACTIV, 7 Oct.
2004).

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