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European Union

US Calls Off Talks on Airbus and Boeing Subsidies with EU

Strategic Insights

— 2 min read

The US has called off talks with the European Union on an agreement to curb government subsidies for Airbus and Boeing, accusing the EU of refusing to negotiate in good faith. The breakdown in negotiations came after the EU failed to comply with a January 11 agreement to eliminate large civil aircraft subsidies. The US has warned it will return to the World Trade Organisation to try to force an end to subsidies for Airbus unless the EU agrees to maintain a standstill on new European government launch aid for the Airbus A350.

Key Takeaways:

  • The US accused the EU of refusing to negotiate in good faith on a commitment to end government subsidies for Airbus and Boeing.
  • The breakdown in negotiations came after the EU failed to comply with a January 11 agreement to eliminate large civil aircraft subsidies.
  • The US warned it will return to the World Trade Organisation to try to force an end to subsidies for Airbus unless the EU agrees to maintain a standstill on new European government launch aid for the Airbus A350.
  • The EU wants an end to tax breaks for Boeing that will continue despite the US move last year to end the foreign sales corporation tax scheme, which was deemed an illegal subsidy by the WTO.
  • Brussels also wants to bring Japan into the negotiations to constrain Tokyo's support for suppliers to Boeing's 787.
  • A US official said the EU's move may be intended to drag out the talks so that Brussels cannot offer launch aid support for the A350.

Statistics:

  • The US has warned it will return to the World Trade Organisation to try to force an end to subsidies for Airbus.
  • The EU has been accused of refusing to negotiate in good faith on a commitment to end government subsidies for Airbus and Boeing.
  • The breakdown in negotiations came after the EU failed to comply with a January 11 agreement to eliminate large civil aircraft subsidies.
  • The US move to end launch aid support for Airbus and Boeing could have significant economic implications for both aircraft manufacturers.
  • The dispute between the US and EU over aircraft subsidies has been ongoing for over a decade.

Sources:

  • "USTR Spokesman Richard Mills on EU and US Commitments Regarding Aircraft Subsidies" (USTR News Release, January 11)
  • "US, EU Agree to Negotiate End to Subsidies for Airbus and Boeing" (The New York Times, January 11)
  • "EU Sued by US Over Boeing Tax Break" (BBC News, January 10)

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