INTERNATIONAL BUSINESS NEWS
July 04, 2012 12:00:00 AM
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The conflict over subsidies between Boeing and Airbus is opening the door for other competitors to gain ground in the industry, two Boeing representatives told AFP Tuesday.

Speaking ahead of the Farnborough International Airshow in Britain, where thw two plane makers are likely to continue jousting in their seven-year-old trade fight, the representatives said they wanted to bring order to the highly competitive aircraft business.

"Our objective is to put discipline in place for our industry," said Bob Novick, Boeing's legal counsel on World Trade Organization matters.

"We've always been of the view that we should put an end to this dispute," Novick said.

"If this isn't addressed properly and the subsidies are allowed to go unchecked, then obviously it is something other countries that are moving into the aircraft space will look at as offering incentive."

"There's China, Russia, Brazil; there's Canada," he said.

"There are many that are aspiring or close" to being competitors int he aircraft business.

Ted Austell, Boeing's vice president of international trade policy, said the two giants' trade dispute has far-reaching consequences for the aviation industry.

"The case is not just about Airbus and Boeing, or the US and the EU," Austell said.

Giving the impression that WTO rules can be ignored without penalty "may not serve the long-term interest of our industry."

Boeing and Airbus, which dominate the global aircraft business, have been at odds since 2004 over subsidies they receive from their governmental backers, and both have won and lost complaints filed against the other at the World Trade Organization.

Novick said the ongoing subsidies dispute will be a hot topic when transportation ministers meet at the Farnborough show beginning Monday.

"One of the issues that will be discussed in the near future, including at the airshow next week, is money to the A350," Novick said, referring to European launch aid for the new Airbus plane.

"The United States has put forward evidence to what looks like 3.5 billion euros ($4.4 billion) of launch aid for the A350. WTO law makes clear you can't provide the exact same subsidies that were just found to be illegal," Novick said.

"The European Union has done nothing by its own admission to remove the subsidies from the A380 and nothing regarding many other subsidies," he added, referring to Airbus's super-jumbo A380 plane that entered service in 2007.

"The best outcome would be for Europe and Airbus to abide by their obligations" under the WTO, Austell said.

"The US and Europe really have a common interest in demonstrating that the WTO works. It works for us and it should work for everyone else," he said.

Novick said however, that "it doesn't appear that the EU or European governments are prepared to resolve this issue.

"What they've done instead is to keep giving new money to Airbus -- and Airbus keeps taking new money."

It "doesn't really set a great foundation for a negotiation," he said.

AFP

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