By Julie Johnsson and Kathy Bergen | The Obama Administration is open to negotiating a settlement to a long, costly trade dispute with the European Union over illegal government subsidies to planemakers Boeing Co. and Airbus SAS, U.S. Trade Representative Ron Kirk told reporters Thursday.
But Kirk said the Americans won’t return to the table unless the Europeans agree to stop providing launch aid to Airbus’s aircraft development programs, such as the Airbus A350-XWB, Airbus’s response to Boeing’s 787 Dreamliner.
“We have always said, that particularly with Boeing and Airbus dominating the commercial aviation industry, and the reality, it’s not like either one of them has fared poorly, that a negotiated resolution would be the best thing,” Kirk said. “But we will not yield on our position that the European Union has to allow Airbus to go out and compete on commercially acceptable terms and do so without launch aid.”
Analysts had predicted that the otherwise close trade partners would focus on hammering out a new bilateral trade agreement now that the World Trade Organization has found both Chicago-based Boeing and France-based Airbus benefited from prohibited subsidies.
But such an agreement appears unlikely, analyst Richard Aboulafia said, even though both sides have said they would prefer talks to potentially lengthy WTO reviews and appeals.
Although the WTO found that every Airbus jet benefited from aid totaling about $20 billion, four European governments have pledged more than $3 billion in launch aid for the largely composite Airbus A350, which is just beginning production.
The U.S.’s intent in filing the original trade case against the E.U. in 2004 “was to disrupt public funding for the A350,” Aboulafia noted. “The European’s objective was to find anything that would give them justification to stay the course. They found just enough.”
Kirk wouldn’t say whether the U.S. will appeal a March 31 finding by the WTO that Boeing got an illegal $5.3 billion boost from state and federal governments to develop the 787 and other aircraft.
But he added that the Obama administration is “examining that ruling and we are going to make sure we protect our interests.” An European Union spokesman couldn’t be reached for comment.