U.S., EU Talk Aircraft Subsidies

Two of U.S. Trade Representative Robert Zoellick’s top aides are in Brussels today meeting with their European Union counterparts trying to put an end to what the U.S. claims are unfair subsidies to Airbus Industries. At issue is a section of an agreement between the U.S. and Europe that nails down how (and how much) governments can help aircraft manufacturers develop new planes. That section allows governments to lend companies money at below-market rates to fund up to a third of development costs. Europe has supplied such loans to Airbus; the U.S. has not done the same for Boeing and wants the provision scrapped. If negotiations don’t work, the U.S. says it intends to take the case to the World Trade Organization. EU officials have said they’ll discuss the issue but they want the U.S. to curb what it alleges are indirect subsidies to Boeing funneled through defense and NASA contracts. President Bush called for the latest discussions not long after Airbus announced it might develop a direct competitor to Boeing’s 7E7 Dreamliner.