Boeing does not want to start a trade war over subsidies, but Europe must stop giving state aid to rival Airbus, which is destroying competition in the aerospace industry, a senior Boeing official said on Friday.
Boeing Senior Vice President Tom Pickering said he did not have absolute confidence that talks later this month between the United States and the European Union (EU) would settle a dispute over launch aid, a subsidy used to fund new airplane models.
"We are looking for a negotiated solution. Our interest is not in starting a trade war, and not necessarily going to the WTO unless we have to," Pickering told Reuters.
Last month US President George W. Bush threatened to bring a World Trade Organisation (WTO) case against the European Union over the subsidies it pays to Airbus if Brussels does not agree to stop them voluntarily. Pickering said the amount of aid Airbus receives is destroying competition and has contributed to Boeing's dramatic loss of market share at the hands of its European rival. Airbus is owned by European aerospace company EADS and Britain's BAE Systems.
"The subsidies extended to Airbus give it an outstanding advantage in competition, in making and selling large commercial aircraft," he said. "Boeing has already suffered significant damage as a result. We are concerned that the subsidies have permitted Airbus to buy a large amount of market share," he added.
In less than a decade Boeing's share of the market for large commercial aircraft has shrunk from 80 percent to less than half, with Airbus outselling Boeing for the first time in three decades last year.
Boeing estimates that Airbus has received some $15 billion in government launch aid since 1967, including some $3.7 billion for its new 555-seat A380.
Boeing wants the EU and the United States to make a new pact, replacing a 1992 treaty that capped launch aid at a third of the cost of a new project, Pickering said.
"The fundamental principles would have to be no more launch aid, clear discipline in all other areas of subsidy and transparency with respect to the activities of both companies," he said.
If negotiations fail and the 1992 treaty is terminated, the United States could go to the WTO and press for the implementation of a 1994 agreement prohibiting all subsidies for large commercial aircraft. "That's the kind of level playing field we could live with," Pickering said.
EU officials have said they will discuss Airbus's launch aid if the United States will discuss the indirect subsidies Boeing gets through US government-funded research for military and space projects.
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