EC warns Bush over threat of new trade war

Published on Monday 16 August 2004 01:34

THE threat of another trans-Atlantic trade war intensified last night after the European Commission warned US president George Bush over his bullish statements demanding an end to what he describes as "unfair" subsidies to the plane-maker Airbus Industrie.

President Bush said he would take action against the European Union and Airbus at the World Trade Organisation over special EU government loan arrangements agreed with the European aerospace giant.

The EU issued as statement pointing out there was already and EU-US agreement setting out clear rules on state aid for aircraft manufacturers on both sides of the Atlantic.

He said, "If the US now feels a need to review the functioning of the agreement, the European Commission is open to discussions.

"Of course, any discussion needs to address both direct support, as granted by European governments to Airbus in the form of loans, and indirect support, as provided by the US government to Boeing."

President Bush in a campaign speech last week, said: "I've instructed US trade representative Bob Zoellick to inform European officials in his September meeting that we think these [Airbus] subsidies are unfair and that he should pursue all options to end these subsidies - including bringing a WTO case, if need be.

"We believe in free trade. We want that free trade to be fair, as well. And getting rid of the subsidies of Airbus will make the trade fair, will make the playing field level."