US files WTO case vs EU over ‘unfair’ Airbus subsidies

US Trade Representative Robert Zoellick said that the US is filing a World Trade Organization dispute settlement case against the European Union regarding "billions of dollars in unfair subsidies provided to Airbus by European governments."

"This is about competition and a level playing field," Zoellick said in a statement. "Since its creation 35 years ago, some Europeans have justified subsidies to Airbus as necessary to support an 'infant' industry. If that rationalization were ever valid, its time has long passed. Airbus now sells more large civil aircraft than Boeing."

"We urged the EU to agree that neither of us should provide new subsidies to aircraft manufacturers," Zoellick said. "We offered to simplify our task by using the subsidy definition that the EU and the United States had already agreed to in the WTO. We even were willing to accept subsidies in the pipeline - but then draw the line. That's a fair offer.

"But the EU and Airbus appear to want to buy more time for more subsidies for more planes," the US Trade Representative continued. "That isn't fair and violates international trade rules."

Zoellick said since the two sides couldn't agree, "the United States decided to pursue resolution through the agreed procedure of the multilateral trading system, by bringing a WTO case before an international dispute resolution plan."

The USTR said both the US and the EU recognize the appropriateness of using the WTO process to resolve trade disputes and noted that the US and Europe in recent years have each brought about the same number of WTO disputes against each other.

The agency pointed out that the US in recent months has been urging the European Union Commission to negotiate a new agreement to replace the 1992 US-EU Agreement on Large Civil Aircraft.

Boeing is the leading US producer of airplanes and Airbus is its main competitor, the agency noted. "When the 1992 agreement was negotiated, Airbus accounted for only about 30% of the global market," it said. "It now represents more than 50% of this market. Clearly, the 1992 agreement has outlives its usefulness."

Zoellick recalled that the 1992 agreement was negotiated after the US won a case against European subsidies to Airbus and was pursuing another case within the General Agreement on Tariffs and Trade system that preceded the WTO dispute settlement.

"The US remains interested in an agreement that ends all new subsidies," he said. "So as this case proceeds, we remain open to negotiating a new accord - as long as it ends the new subsidies."

The USTR statement added that consistent with the decision to go ahead with a WTO case the US also exercised its right under the 1992 agreement to terminate that agreement.

"American farmers, workers and businesses can compete against anyone, as long as there is a level playing field," Zoellick said. "Terminating this agreement reinforces our belief that now is the time to end subsidies, ideally through an agreement.

"We remain open to addressing Europe's concerns with regard to government support they believe Boeing receives," he added. "It is in the interests of both Europe and the United States to find a durable solution to this long-standing problem." (Dow Jones)