The United States wants the European Union to negotiate a new civil aircraft agreement that would bar future government subsidies for European aerospace giant Airbus, a US trade official said on Friday.
"It's got to a point where we believe it's time to put to an end any new subsidies for Airbus," John Veroneau, general counsel for the US Trade Representative's office, said.
US jet maker Boeing Co has complained that a 1992 US-EU civilian aircraft pact allows too much European government support for Airbus, helping it sell more jetliners than Boeing, which boasted an 80 percent share a decade ago.
Last week, Senator Patty Murray, a Democrat from Washington state, where Boeing builds most of its aircraft, urged the United States to give a one-year notice that it was withdrawing from the 1992 agreement, warning European subsidies "gravely threatened" the US aerospace industry.
US and EU trade officials met in Brussels on Thursday to discuss the aircraft issue.
"What I made clear to (senior EU trade official) Peter Carl was that the 1992 agreement has outlived its usefulness," Veroneau said in an interview. "Today, Boeing and Airbus have basically split the market ... So, if there ever was a justification in 1992, it certainly isn't there today."
The United States will not challenge existing European government support for Airbus, which is owned by European aerospace company EADS and Britain's BAE Systems.
"We're not looking to turn the clock back. We recognise that any government support that's been announced is going to follow through," Veroneau said.
But once current European government assistance "has moved through the pipeline, it's at that point that no new subsidies would be introduced" under proposed US terms for a new civil aircraft pact, he said.
Boeing and Airbus each get government aid and each has accused the other of violating trade rules.
Boeing secured state tax breaks worth an estimated $3.2 billion over 20 years to assemble a new mid-sized jet, the 7E7, in Washington. Japan, where major 7E7 parts will be built, reportedly plans to help fund development.
Airbus gets repayable government loans to fund up to a third of the cost of new jet launches, including about $3.7 billion for the massive 555-seat A380 slated to debut in 2006.
Boeing claims the loans come at interest rates well below the commercial market, a claim Airbus has disputed. The loans do not have to be repaid if the program is not profitable.
"That has allowed Airbus to avoid the commercial risk that we take when we launch a new airplane," Boeing spokesman Russ Young said.
Airbus spokeswoman Mary Anne Greczyn said the loans strictly adhere to the 1992 agreement and do not constitute subsidies.
"Airbus has paid and continues to pay back those loans, with interest. Airbus aircraft programs are one of the most profitable investments of European taxpayers," Greczyn said.
The United States views a second meeting with the EU in September as critical to determining whether the two sides can reach a new agreement, Veroneau said.
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