Brussels, 24/07/2007 (Agence Europe) - The 2nd hearing in the context of the US complaint filed with the WTO against EU support to Airbus (DS316) will be held in Geneva on 25 and 26 July. In a note to the press on Tuesday, the Commission criticises the written submission of the US filed ahead of the hearing as, it says, it “is characterised by equal parts of unwillingness/inability of the US to respond to key points raised by the EU, or US attempts at artificially enlarging the figures involved”. “The US now seeks to argue that the benefit of Member State Financing (MSF) alone amounts to as much as USD 205 billion”, the Commission deplores, denouncing this “totally unrealistic estimate”. It is more than 8 times the capitalisation of EADS, USD 25.8 billion, or roughly 12 times the net assets of EADS, USD 18.4 billion. “The US magically reaches this 'estimate' by compounding interest on subsidies dating back as far as 1967”, the Commission goes on to say, stressing that, by applying the same method of calculation to massive federal, state and local subsidies benefiting Boeing, the amount challenged by the EU would be not USD 23 billion, but rather USD 305 billion. The Commission also considers that the US continues to inflate R&D support benefiting Airbus by, for example, including support granted to other partners in collaborative research projects or to non-Airbus activities. It refutes, moreover, the US argument that, without MSF, Airbus could never have launched its aircraft programmes. “The US conveniently overlooks that a number of Airbus models were launched without any MSF, just as launch has also taken place in situations where Airbus in fact obtained financing on better terms and conditions in the commercial market”. The Commission said that Boeing's outstanding financial performances, in terms both of profits and orders, made the American claims implausible, claiming, as they did, that the American company had been wronged. Washington, it should be remembered, believes that European aid to Airbus constituted illegal subsidies under WTO rules. The Commission says that this kind of support is allowed by the 1992 EU-US bilateral agreement on the wide-body aircraft trade which sought to provide a framework for granting public aid to aircraft manufacturers, an agreement unilaterally denounced by Washington in 2004. A confidential interim judgment on the DS 316 could come at the end of October.
At the same time, the EU is refining its arguments ahead of the second hearing in the European complaint to the WTO against public aid to US aircraft builder Boeing (DS 353) which will take place on 26 and 27 September. The EU hopes to prove to the WTO panel set up to decide on this issue that “lavish subsidies” to Boeing - the EU believes the US constructor received some 23.7 USD in illegal aid since 1992 - meant it could “engage in aggressive pricing of its aircraft which has cost sales, lost market share and price suppression to Airbus on a number of select markets”. The EU also says that it can prove that Boeing benefited from illegal export subsidies and that the US has caused serious prejudice to the EU's interests by violating the EU-US bilateral agreement of 1992. According to the Commission, the US Federal Administration paid almost 18.9 billion USD between 1990 and 2004 in the form of R&D aid and tax breaks (support from NASA and the Defense Department, and Foreign Sales Corporation subsidies), the remainder (4.8 billion) having been paid by several States (Washington and Kansas) or by US cities. (eh)