Titanic Airbus-Boeing trade war goes to the wire

15th September 2010, Comments 0 comments

An acrimonious multi-billion dollar battle between aviation giants Airbus and Boeing will shift up a gear on Wednesday when the World Trade Organization issues an initial ruling on US subsidies.

The much-awaited ruling in the tit-for-tat dispute comes a year after the WTO rapped Brussels for illegally providing subsidies to Airbus, the maker of the A380 superjumbo.

Diplomatic sources said that the WTO's decision on the case brought by Brussels against aid provided by Washington to Boeing is likely to restore the bitter dispute so some sort of balance, perhaps allowing for a settlement.

"This report should rebalance the situation," said a diplomat, who declined to be named.

Brussels brought its case to the WTO on October 6, 2004 -- the very same day that Washington complained against EU subsidies to Airbus. It was therefore frustrated with the time lag between the rulings on the two cases.

An Airbus spokeswoman said that Wednesday's ruling could herald a negotiated settlement to the long-running dispute between the two rivals, which are at each other's heels for every commercial airliner order.

"Airbus is looking forward to see the European Union case finally moving forward," said Airbus spokeswoman Maggie Bergsma ahead of the ruling.

"We expect the WTO to confirm that Boeing received billions of illegal subsidies."

According to an aviation analyst who declined to be named, if the WTO were to find against Boeing in the dispute, "it would be the most direct route towards a negotiation to end this affair.

"I think it would head towards that," he said.

"It is in their interest to end this war and to concentrate instead on the development of their aircraft because competitors are closing in on mid-sized carriers," he added.

The interim verdict, which is only issued to parties concerned, is expected to be mixed and "rather complicated," said the diplomat.

The EU complaint accuses Washington of violating international trade rules by funnelling subsidies to civil aviation through military research funds.

About 23 billion dollars of subsidies for Boeing were masked as defence research, Brussels claimed.

But Boeing, the maker of the new 787 Dreamliner, insisted that the US support was above board in a statement issued hours before it sees the ruling.

"We look forward to learning how the WTO has ruled in today's preliminary decision on US practices, none of which have the market-distorting impact of launch aid nor even approach the sheer scale of European subsidy practices," the US giant said.

It also accused the Airbus of not abandoning controversial "launch aid", some of which was found illegal by the WTO in its earlier ruling in the case.

"To date, Airbus and its government sponsors have defiantly resisted abandoning launch aid," Boeing said, adding that it expected Airbus to "make good on their end of the WTO bargain."

The EU has appealed against the WTO's earlier ruling against aid for Airbus.

Under WTO rules, the interim ruling is meant to be held confidential until the global trade body publishes the full report by its panel of dispute settlement arbitrators.

© 2010 AFP

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