US trade chief vows action on aid for Airbus jet

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June 25, 2009

Anonymous The Salem News Thu Jun 25, 2009, 10:11 AM EDT

PARIS (AP) — President Barack Obama's trade chief said Thursday that the U.S. will respond "quickly and swiftly" if European nations agree to subsidize the Airbus A350 jet program.

Ron Kirk said at a Paris news conference that the United States has made its "objections to launch aid for Airbus plain and unequivocal."

Airbus CEO Tom Enders says government financing for the euro11 billion ($15.24 billion) A350 XWB program is needed to compete on a "level playing field" with archrival Boeing Co. European governments may finance as much as 30 to 33 percent of the costs with reimbursable loans.

"We think it is a grossly overreaching example of government assistance of a private industry," said Kirk.

The funding row over the A350 XWB, designed to compete with Boeing's hot-selling 787, could fuel an old trade dispute between the U.S. and European Union, who both accuse each other of illegal subsidies.

The trans-Atlantic dispute, which the World Trade Organization has been considering for years, depends on the ability of Washington and the Brussels-based EU to show that alleged subsidies have caused their industries harm. Both have presented evidence of lost plane sales or lowered prices to back up their claims. The WTO could eventually award billions in retaliatory sanctions.

Kirk, a former Dallas mayor, said he is "reasonably hopeful" of a ruling from the WTO panel on the existing U.S. complaint against Airbus "as early as the end of August."

"That end of itself might be sufficient to convince our colleagues in France and Germany and otherwise to rethink their position as it relates to airline launch aid.

"If they do move forward with that we will respond quickly and swiftly and file another action within the WTO."

The United States says EU subsidies have enabled Airbus to capture Boeing customers. The EU counters that Boeing receives U.S. federal and state tax breaks, development funding and grants, as well as large amounts of military contracts.

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