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U.S. blames EU for reneging on aircraft subsidy talks

U.S. blames EU for reneging on aircraft subsidy talks

   The United States threatened to break off negotiations and seek a ruling from the World Trade Organization unless the European Union sticks to negotiating terms for ending subsidies for large aircraft manufacturers Airbus and Boeing.

   In mid-January, the two sides agreed to settle their dispute over state subsidies for aircraft makers through direct negotiations rather than pursue litigation through the WTO. Both sides pulled their requests for WTO arbitration in December.

   The Office of the U.S. Trade Representative issued a statement Friday criticizing the EU for “backtracking and seeking to change the terms” of the negotiating framework for ending subsidies.

   “Despite our best efforts, it’s clear that the EU is unwilling to eliminate launch aid subsidies,” the statement said. “If the EU either breaks or refuses to extend the terms, we will return to litigation to eliminate Large Civil Aircraft subsidies.”

   The EU said it was “completely surprised” by the U.S. statement, especially since Robert Zoellick, the deputy secretary of state and former U.S. trade representative, did not mention any intent to break off negotiations in a meeting Friday with EU Trade Commissioner Peter Mandelson.

   The dispute escalated last year after the United States terminated a decade-old agreement permitting limited subsidies to commercial aircraft producers expired. The United States argued that the EU was not phasing out state aid as the agreement required. The United States filed a complaint against the EU over state aid to Airbus and the EU retaliated with an action for U.S. support of Boeing.

   The issue has been magnified the past couple of years as Airbus has overtaken Boeing as the world’s largest aircraft manufacturer. Airbus is preparing to launch the A380 super jumbo jet and Boeing argues that Airbus is now an established company that no longer requires state aid for research, development and marketing.

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