US and EU in row over funding aviation firms

THE US and the EU started a multi-billion euro transatlantic trade war yesterday, alleging unfair subsidies for Europe’s Airbus and America’s Boeing, two aviation industry giants.

US trade authorities fired the first volley, saying they were filing a complaint against the European Union to the World Trade Organisation, contesting what they regard as unfair subsidies provided to aircraft company Airbus by European governments.

The European Union quickly retaliated, filing its own complaint to the WTO, challenging “massive subsidies” for Boeing.

“If this is the path the US has chosen, we accept the challenge,” EU Trade Commissioner Pascal Lamy said barely an hour after his US counterpart, Robert Zoellick, announced the American action in Washington.

The Office of the United States Trade Representative said it was taking the action because recent negotiations between the two sides failed to resolve the dispute.

“This is about fair competition and a level playing field,” US trade representative Zoellick said. “Since its creation 35 years ago, some have justified subsidies to Airbus as necessary to support an infant industry. If that rationalisation were ever valid its time has long passed. Airbus now sells more large civil aircraft than Boeing,” he said.

Lamy, however, has dismissed the threat of a WTO challenge as “election-year politics” from US President George W Bush, who is facing criticism over the loss of US manufacturing jobs in recent years.