Mon, Oct 11, 2004
"They Haven't Provided Grounds For Terminating The
Agreement"
You can't do that. So says the European Union in response to the
Bush administration's plans to pull out of a 1992 agreement on
government subsidies to companies like Boeing and Airbus. The US
announced its withdrawal from the accord last week, fueling the
growing dispute between the world's two biggest trading
partners.
"They haven't provided grounds for terminating the agreement and
therefore we don't think it's a substantiated termination," said
European Commission spokeswoman Arancha Gonzalez at a news
conference in Brussels. "This may be a way for them to escape from
the disciplines in the 1992 agreement." She was quoted by Bloomberg
News.
The situation is fraught with charges and counter-charges as the
US filed its complaint with the World Trade Organization last week.
The US says European governments have pumped $15 billion in loans
to Airbus since 1967. On the other hand, the EU says America has
given Boeing $23 billion in aid since 1992. The Europeans say that
aid has come in the form of local government tax breaks to Boeing,
military research contracts and Japanese subsidies (see related
story, this date).
When the US filed its case with the WTO last Wednesday, it said
the 1992 agreement on aerospace subsidies had "outlived its
usefulness" in view of "Airbus's maturation into a highly
competitive company. It serves only to perpetuate the continuing
subsidization of Airbus."
Now that the WTO complaint has been filed, both sides have 60
days to try to work things out on their own. If that doesn't work,
the WTO will form a committee to delve into the matter. Negotiators
for both the US and the EU say they're open to a settlement.
Without one, some analysts say both Airbus and Boeing could be
stripped of all subsidies.
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