EU Offers to Delay Airbus Launch Aid to Avoid WTO Dispute

The European Union has made an offer to delay payment of launch aid for Airbus's A350 aircraft, which is set to be a competitor to Boeing's 787 Dreamliner, in an attempt to avoid the biggest battle in the history of the World Trade Organisation (WTO). The move comes ahead of a self-imposed deadline to settle the dispute over aircraft subsidies, which has seen recent acrimony and a lack of progress in negotiations. The US and EU have expressed willingness to continue reviewing the situation rather than triggering WTO litigation.

Key Takeaways:

• The EU's offer to delay launch aid for the A350 is aimed at avoiding a WTO dispute over aircraft subsidies.
• The A350 is set to be a competitor to Boeing's 787 Dreamliner, partly built in Japan.
• Airbus has said it would seek €1bn in launch aid for the A350, but Washington has warned this would only prolong the truce.
• An aide to EU trade commissioner Peter Mandelson said that launch aid will not be disbursed immediately, but this is not a formal standstill.
• The US and EU are at odds over the role played by the US state of Washington and Japan in financing Boeing's 787 aircraft.
• Airbus has outpaced Boeing in recent years to become the world's largest aircraft manufacturer.

Statistics:

• €1bn (GBP 680m) in launch aid sought by Airbus for the A350 (Source: Airbus)
• $15bn (GBP 7.9bn) in alleged illegal launch aid received by Airbus (Source: US allegations)
• $23bn in prohibited subsidies received by Boeing since 1992 (Source: EU claims)
• 90 days given to negotiate an agreement to end subsidies to civil aircraft (Source: US-EU truce)

Sources:

• "Illuminating change," Page 38, Financial Times Limited, 2005