US threatens WTO action on Airbus

US President George Bush has warned European aircraft maker Airbus Industries of World Trade Organisation action in September because of "unfair" government subsidies.

    Boeing hopes the subsidies issue will be resolved by September

    Bush told reporters on Friday he had instructed Trade Representative Bob Zoellick to "pursue all options to end these subsidies".

    The president's election-year threat to go to the WTO came after he met there behind closed doors workers at Boeing, Airbus' archrival, during a campaign swing.
      
    "Airbus was founded about 30 years ago and has received, in those 30 years, large government subsidies from European nations, and continues to receive them," said Bush.
      
    "I think it's unfair to this American company that these European governments continue to subsidise Airbus," said Bush. "I believe if our country is treated fairly, we can compete with anybody, anytime, anywhere." 
      
    Government support

    Under a 1992 US-European Union agreement, European support for new aircraft programmes - provided in royalty-based loans - was limited to 33% of the total cost, repayable with interest within 17 years.
      
    On the other hand, indirect US support through NASA or military programmes was limited to 3% of turnover for the US large commercial aircraft industry.
      
    Boeing has charged that the arrangement allows Airbus to get state money virtually on demand and welcomed approaching the WTO.
      
    Boeing reaction

    Boeing president and chief executive officer Harry Stonecipher said: "We are pleased that the president is determined to see US negotiators create a more appropriate framework with their EU counterparts.

    "The current framework cannot be justified and needs to be changed immediately," he said.

    Zoellick has recently stepped up pressure for an overhaul of the 1992 deal, telling reporters at a news conference on 8 July that the agreement was outdated.
      
    Airbus is jointly owned by the European Aeronautic Defence and Space Co, which holds 80%, and Britain's BAE Systems, which holds the remainder.

    SOURCE: AFP


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