Sets Guidelines For Gov't Help With Financing

Could all the sniping between Airbus and Boeing -- and Bombardier, Embraer, and a slew of other manufacturers -- regarding government subsidies soon be a thing of the past? The Organization for Economic Co-operation and Development (OECD) says representatives with the world's major civil aircraft exporting countries have agreed to limit government support for the sale of aircraft... a possible first step towards regulating other subsidies related to manufacturing.

Agence-France Presse reports US representatives hailed the international agreement, which sets guidelines on government financing of aircraft exports, saying it will "level the playing field for the US airline industry."

The accord follows more than two years of negotiations.

"By requiring government financing to closely track the market, the understanding will allow civil aircraft sales campaigns to concentrate purchase decisions on price and quality, where US producers excel, rather than on the terms and conditions of official financial packages where subsidies can sway purchase decisions," the US Treasury said.

For all the warm-fuzzies, however, one significant issue remains -- for the moment -- unchecked. The accord does nothing to ease tensions between the US and European Union regarding government subsidies towards the manufacturing of commercial airliners -- only to regulate the sale of such planes across borders.

That means Boeing and Airbus will continue to bicker over which planemaker receives more 'illicit' support from their respective governments, when it comes to aid in helping develop news planes.

The agreement applies to all new civil aircraft contracts signed after April 30 of this year.

In addition to the US and EU, other countries that have signed the agreement include Australia, Brazil, Canada, Norway, Switzerland, Japan, and New Zealand.

FMI: www.oecd.org