EU Offers Fresh Proposal to Revive Stalled Talks on Boeing-Airbus Subsidies

Strategic Insights -

The European Union sought to breathe new life into stalled negotiations with the US over aircraft subsidies to Boeing and Airbus by presenting a fresh proposal, understood to involve a proposed cut of about a third in launch aid for Airbus's A350 and other aircraft projects. The offer was made by Peter Mandelson, the EU's trade commissioner, in a phone conversation with Rob Portman, the US trade representative. However, the decision by Brussels to publicise the gesture seemed to irritate Washington rather than help lower tensions. The aircraft subsidy talks broke down in March amid personal acrimony between Mr Mandelson and Mr Portman's predecessor as USTR, Robert Zoellick.

Key Takeaways:

  • The EU presented a fresh proposal to revive stalled talks on Boeing-Airbus subsidies, involving a proposed cut of about a third in launch aid for Airbus's A350 and other aircraft projects.
  • The offer was made by Peter Mandelson, the EU's trade commissioner, in a phone conversation with Rob Portman, the US trade representative.
  • The proposal aims to address the US concerns over the launch aid granted to Airbus, with an estimated cut of Euros 1.3bn (Pounds 890m) for the A350 aircraft.
  • The four governments that are shareholders in Airbus, including France, Germany, Spain, and the UK, are under pressure to grant launch aid for the A350 aircraft, which is due to challenge Boeing's 787 project.
  • The US remains committed to eliminating subsidies to Airbus, with Peter Allgeier, the US deputy trade representative, stating that the goal is not just to put a cap on them.
  • Airbus is planning to launch the A350's manufacturing programme at the Paris air show, following the successful test flight of the A380, the world's largest commercial airliner.

Statistics:

  • The proposed cut of launch aid for Airbus's A350 and other aircraft projects is estimated to be about a third.
  • The estimated cost of launch aid for the A350 aircraft is Euros 1.3bn (Pounds 890m).
  • The launch aid for the A350 is expected to be granted to Airbus by the four governments that are shareholders in the company.

Sources:

  • RAPHAEL MINDER BRUSSELS -- The European Union sought yesterday to breathe new life into stalled negotiations with the US over aircraft subsidies to Boeing and Airbus after presenting a "fresh proposal".
  • Richard Mills, USTR spokesman, "We had an agreement with the Europeans that each side would quietly reflect on the Friday call over the weekend. We're extremely disappointed that they've begun spinning to the press."
  • Peter Allgeier, the US deputy trade representative, told a congressional hearing that he was pessimistic about the chances of reaching a deal and averting what would be the biggest arbitration in the history of the World Trade Organisation.