US reopens case over Airbus aid

Published on Tuesday 31 May 2005 00:13

EUROPE'S woes deepened last night when the United States government said it would resume a trade case alleging that the European Union is providing illegal subsidies to Airbus, the major competitor to the US-based Boeing.

Washington and the EU suspended rival cases against government support for Airbus and Boeing in January to try to negotiate a deal to eliminate aircraft subsidies on both sides of Atlantic.

The US decision to reactivate its complaint to the World Trade Organisation follows phone calls between US trade representative Rob Portman and the European Union trade commissioner, Peter Mandelson, on Friday, and again yesterday to see if a deal could still be reached, even though the April deadline has long passed.

But the trade officials claimed in a joint statement that they would not let the aircraft spat spill into other trade areas. "We remain united in our determination that this dispute shall not affect our co-operation on wider, bilateral and multilateral trade issues. We have worked together well so far, and intend to continue to do so," they said.

The US is claiming that Airbus is unfairly supported by "launch aid" from European governments, which funds a large part of Airbus's research and development costs. The Americans claim Airbus has received $18 billion-plus (9.5 billion) worth of aid.