US and EU Welcome Signs of Airbus Subsidy Deal on Eve of Paris Air Show

Strategic Insights -

As the World Trade Organization (WTO) suit filed by the US against European Union member states for providing subsidies to Airbus aircraft sparks tension ahead of the Paris air show, the US and EU have greeted signs that EADS, Airbus' parent company, is prepared to give up "launch aid" for its aircraft in exchange for a settlement that would eliminate subsidies for Boeing. This move follows EADS' offer to give up all launch aid, including that for its A350 aircraft, in a letter sent to EU Trade Commissioner Peter Mandelson, in an attempt to facilitate further negotiations between the two sides. The US administration has expressed its openness to negotiating an end to subsidies, including for the A350, and it welcomes EADS' commitment to negotiate the end of launch aid within the context of an agreement to eliminate subsidies.

Key Takeaways:

  • The US has filed a WTO suit against European Union member states for providing "launch aid" to Airbus aircraft.
  • EADS, the parent company of Airbus, has offered to give up all launch aid, including that for its A350 aircraft, in an attempt to facilitate further negotiations between the US and EU.
  • The US administration has expressed opposition to the US House of Representatives' recent approval of a defence bill that would prevent EADS from bidding for the US air force's refuelling tanker deal while the US and EU are involved in a WTO dispute.
  • The White House has expressed opposition to the Senate's traditional support for defence-related "Buy America" legislation.
  • The EU has counter-argued that Boeing has received more than $20 billion in subsidies.
  • A US trade official has stated that while the administration would examine any new EU proposals carefully, it would insist that EU member states halt launch aid during negotiations.

Statistics:

  • The US has accused the EU of violating global trade rules by providing $10 billion in "launch aid" for Airbus aircraft.
  • The EU has countered that Boeing has received more than $20 billion in subsidies.
  • The Paris air show is expected to be marred by the Boeing-Airbus dispute.

Sources:

  • [1] "US Welcomes Europe's Offer to End Airbus Subsidies," _The Washington Post_, no date.
  • [2] "EADS Offers to Give Up Launch Aid for Airbus Aircraft," _Bloomberg_, May 31.
  • [3] Letter from EADS to Peter Mandelson, EU Trade Commissioner, May 31.