U.S. And EU To Negotiate End To Aircraft Subsidies

By John S. McClenahen Until Jan. 11, it appeared that the long-standing and bitter dispute between Chicago-based Boeing Co. and Europe's Airbus SAS over development and production subsidies for large civil aircraft ultimately might be decided by the Geneva, Switzerland-based World Trade Organization (WTO). That's much less likely to happen now. On Jan. 11, the U.S. and the European Union (EU) announced they had agreed on terms for negotiations to end the subsidies. U.S. and European negotiators have given themselves three months to reach an accord, and the U.S. and EU have pledged not to institute new subsidies or pursue dispute resolution within the WTO during the bilateral negotiations. Among the items to be negotiated is when subsidies would actually end, says a senior U.S. trade official. Boeing has charged that government subsidies for Airbus have allowed the European company to develop a family of aircraft without incurring full commercial risk. Airbus has asserted that Boeing's defense business subsidizes its commercial aircraft business through technology transfer. The negotiations involve only the U.S. and the EU-and only large commercial aircraft. They would not apply, for instance, to Canada and Brazil and their dispute over subsidies for the development and marketing of regional-jet aircraft.

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