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U.S. Trade Chief Vows Action Against Airbus Aid
By Emma Vandore, AP Business Writer
Manufacturing.Net - June 25, 2009

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PARIS (AP) -- President Barack Obama's trade chief said Thursday that the United States 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."

European governments may finance a third of the euro11 billion ($15.24 billion) development costs of the A350 XWB program in reimbursable loans, which Airbus CEO Tom Enders says are needed to compete on a "level playing field" with archrival Boeing Co.

The funding row over the A350 XWB, designed to compete with Boeing's hot-selling 787, could fuel an old trade dispute between the United States and the European Union, which both accuse each other of illegal subsidies and have brought cases before the World Trade Organization.

The United States says illegal 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 hidden subsidies through military contracts.

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," which the U.S. considers "a grossly overreaching example of government assistance of a private industry."

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

EU spokesman Lutz Guellner said European governments "would defend ourselves at the WTO, if any other WTO member were to bring a case."

But he said it's too early to draw any conclusions about the A350 because "the specific conditions of any financing decision are yet to be finalized."

French Transport Minister Dominique Bussereau said last week that the four nations that are home to Airbus production facilities -- France, Germany, Britain and Spain -- could agree on funding arrangements within a month.

Kirk was in Paris for a meeting of ministers from the Organization for Economic Co-operation and Development. The rich-country club, together with invitees China, Hong Kong and Argentina, endorsed conclusions which vowed to "resist protectionism."

They also said they will make export credit available, particularly to emerging markets and developing countries, to support global trade, which has been hurt by the crisis.

WTO Director-General Pascal Lamy, speaking after a meeting hosted by the Australian embassy in Paris, said the crisis combined with a change of government in the United States, India and South Africa is leading to an "much better improved ambiance" as nations seek a conclusion to the stalled Doha trade talks.

"The mood music is now more congenial and it's playing at a faster pace," he said in a news conference. "We now must shift from mood music to dance music."

Kirk proposed that in addition to multi-country talks, "serious bilateral engagement" is needed, meaning countries would have to negotiate one-on-one over how much to liberalize their markets.

Kirk also raised concerns about China's efforts to censor Internet use and its possible trade impact. Washington is calling on Beijing to revoke an order to personal computer makers to supply Internet-filtering software with every PC.

"We think it is an overly intrusive effort to control content among the Chinese people," which also "presents some horribly impractical impediments to the free flow of software in the global marketplace," he said.

Referring to the role of the Internet in the protests that followed Iran's election, he noted: "All of us have witnessed the remarkable turn of events and series of news coming out of Iran that would not have happened but for the ability of those people to have open unfettered access to the Internet."

AP Business Writer Aoife White in Brussels contributed to this report.


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both sides of their mouths  6/25/2009 11:37:00 AM
"We think it is a grossly overreaching example of government assistance of a private industry," said Kirk. ...this from the government that just took over General Motors. That's ballsy.
I Would tend to agree  6/25/2009 11:53:00 AM
As much as I hate to do it...the EU is probably right about Boeing is getting the same thing they offer Airbus, but we just hide it better in the way we do it. Free enterprise is supposed to be just that right? Because you are a customer of Boeing today does not mean you can't or won't take a better deal in the future if it's offered by someone else. We have got in the bad habit of believing if you find it cheaper or better somewhere else there must be a fraud of some type involved. Get over it guys...make it better for less and you will have nothing to worry about.
Maybe someone can explain how this is any different from our own Detroit bailouts.  6/25/2009 11:55:00 AM
It doesn't seem like the US is in much of a position to decry EU subsidies of Airbus. Look at how much help we gave to our auto industries. Keeping them afloat takes customers away from German and Japanese brands.
Did he really say that?  6/25/2009 11:56:00 AM
"We think it is a grossly overreaching example of government assistance of a private industry," said Kirk. Wow. Just wow.
US Airlines should never buy Airbus  6/25/2009 12:07:00 PM
In these times, for a US airline to purchase an Airbus product is almost treason, certainly unpatriotic.
What's goog for the goose is good for the gander  6/25/2009 12:21:00 PM
Guess it's okay for BO to own two automobile manufactures and half the banks. Good old talk out of both sides of the mouth.
Personnel choices matter...  6/25/2009 12:43:00 PM
Oh, Yeah, Rom kirk got this job because 1) He has such wonderful international trade experience from being a mayor, and 2) he's the right color. All that aside, the EU is still wrong here.
Airbus fostering aircraft industry in China  6/25/2009 1:00:00 PM
I will agree that the merits of the US case have gotten a little murkier following the various bailouts, however the EU has been playing this game for a decade before the current global financial crisis, and numerous other nations around the world have employed the same bailout strategy in this crisis. Short term bailouts vs. institutionalized subsidies are different things, and so the US and EU should be judged on the subsidy issues. One ironic note: the EU is subsidizing Airbus to maintain a viable aircraft manufacturing industry, and yeet they just delivered their first plane assembled in China, hastening a transfer of skills to China in an industry where they have no current foothold: http://www.airbus.com/en/presscentre/pressreleases/pressreleases_items/09_06_23_first_a320_assembled_china_EN.html
Let the EU pay as much as they like  6/29/2009 5:27:00 PM
I don't see a problem with the EU countries subsidizing AIRBUS. Let them 100% subsidize it and then give away the planes. After the EU taypayers feel burden of these subsidies while Airbus gets fat and has no need to have new inovative products or R&D for new planes, we'll see a level playing field. The WTO is totally political and has no sense of reality.
Airbus Aide  7/2/2009 12:32:00 PM
This is going to seem insignificant down the road as the evidence builds that there are fundamential design flaws to acknowledge. How could anyone think that Airbus is in the same league as Boeing in buliding aircraft?


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