PARIS – Europe and the United States moved closer to a World Trade Organization showdown over aircraft subsidies on Friday, as Airbus said it had received “legally binding” government funding pledges for its newly launched A350 jet program.
U.S. diplomats in Geneva asked WTO to appoint panelists to adjudicate its case against European government funding for Airbus SA, and the EU immediately took the same formal step in its countersuit against Boeing Co. subsidies.
The escalation came a day after Airbus won approval from parent European Aeronautic Defence and Space Co. to build the midsized A350, designed to rival Boeing’s long-range, fuel-efficient 787 Dreamliner.
Announcing ambitious performance targets for the airliner on Friday, Airbus CEO Gustav Humbert said the company had received legally binding funding commitments from all four supporting governments – France, Germany, Britain and Spain.
Humbert said the governments pledged financial support in letters to Airbus.
“You can be assured that we and the governments made sure that the letters we got are legally binding,” he said when pressed on their content, adding that “details of this support should be and will be negotiated throughout the next two months.”
The Airbus chief’s comments appeared at odds with statements by the EU Commission and the British government. Peter Power, spokesman for EU Trade Commissioner Peter Mandelson, said Thursday that ministers had agreed to “delay committing repayable launch investment during the whole of 2006,” in what other EU officials described as an “olive branch” to Washington.
“It’s not true that the U.K. has committed itself to provide any form of financial support to the A350 program at this stage,” British Department of Trade and Industry spokesman James Thomson said Friday.
France’s finance and transport ministers signed an agreement to grant Airbus launch aid, but “without specifying the timing or the amount,” Transport Ministry spokesman Arnaud Leblanc said. This left plenty of room for negotiation with Washington, he said.
Germany also said it was willing in principle to provide launch aid, but details cannot yet be completed, government spokesman Christoph Reichle said.
Calls to Spain’s Industry Ministry went unanswered.
Mandelson’s spokesman called on the United States to clarify whether it was still interested in seeking a negotiated settlement to the WTO dispute after U.S. officials rejected as inadequate an undertaking by EADS and Airbus not to accept any launch payments until 2007.
The EU trade chief will ask U.S. Trade Representative Rob Portman “whether they have finally closed the door to negotiations or are still open to discussion,” Power also said.
Mandelson and Portman are to meet Monday in Zurich, Switzerland, at a gathering designed to rejuvenate talks aimed at agreeing on a framework global trade treaty.
Portman’s office did not respond to questions about the prospects for further talks on plane subsidies. The move to assemble the WTO dispute settlement panel was “a routine matter in continuing our case,” spokeswoman Neena Moorjani said in a statement e-mailed on Friday.
The A350 is due to enter service in 2010, two years after its Boeing rival. Airbus already has 140 orders and commitments for the plane, and is targeting 200 by year’s end; the Dreamliner has 273 commitments to date.
With a program cost estimated at $5.3 billion, Airbus says the A350 will carry 253 passengers 8,800 nautical miles. That compares with a maximum range of 8,500 nautical miles for the Dreamliner with 223 passengers. Airbus also claims the A350 will burn 4 percent less fuel per seat and have 10 percent lower maintenance costs than the 787.
Both companies have yet to build their planes and live up to the promises, but Airbus chief John Leahy nonetheless struck a triumphal note about the A350 performance targets.
“That’s why they’re worried,” Leahy said of Chicago-based Boeing. “That’s why they’re willing to start a trade war.”
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
