Europe sees no end in sight for WTO dispute.(BUSINESS BRIEFING)(World Tourism Organization)

In a recent statement at the European Parliament on the WTO dispute over support to Airbus and Boeing, the European Commission has declared that, despite several good faith attempts to solve the dispute amicably over the past years, the differences between the two sides have proven too big. The Commission says it has not been possible to establish a fair and balanced basis for a negotiated settlement, and it remains sceptical whether the dispute can be resolved at the negotiating table any time soon.

The Commission says it will continue to defend in the WTO European support for Airbus which has resulted in innovation, increased safety, and efficiencies in air transportation. It notes that Airbus has repaid 40 percent more than it has received from EU governments since 1992 and has repaid in excess of 7 billion [euro] so far. It also underlines that the rather modest European research and development assistance and repayable launch investment has not prevented Boeing from launching the most successful (and, according to the Commission, the most subsidised) commercial transport programme in history, the 787 Dreamliner.

Once the WTO decides, probably sometime in 2008, this will most likely not be the end of the story. Both sides will need to examine their options, including an appeal which may continue well into 2009. The Commission maintains that once the WTO has decided in the two cases, it would make sense to sit together with the US to manage the resulting implications. It is unsure whether this might expand into proper negotiations. Competition between Airbus and Boeing should happen in the marketplace, and should be fair and reasonable, says the Commission, adding that this is not the case if the US competitor attempts to portray certain Member States, as "unreliable aerospace business partners and a security risk to US military readiness". Or to instigate legislation in the US Congress to block funds for improvements of US airports to accommodate the A380.

Despite this, the Commission notes with satisfaction that on an official level both the EU and the US have managed to avoid damaging the wider EU-US partnership because of the WTO dispute.

The Commission concludes: "We intend to keep it that way. And we trust that the US will do the same, for example by ensuring that the Airbus/Boeing disputes are not allowed to affect either company's ability to compete fairly in public procurement competitions."

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