Airbus-Boeing battle gets under way at WTO

GENEVA - The World Trade Organisation (WTO) today launched twin probes into state aid for aviation giants Boeing and Airbus, but both Washington and Brussels reaffirmed they were still ready to negotiate a deal.

The Geneva-based trade referee set up panels to investigate accusations by the United States and the European Union over billions of dollars they say have been paid to the world's two largest civil aircraft makers in violation of trade rules.

The row, the biggest and most complex commercial dispute ever, could strain transatlantic relations just as the United States and the EU are struggling to give impetus to troubled WTO free trade talks.

But even as the WTO started the legal ball rolling, both sides declared that they were open to further bilateral talks to resolve the argument.

"We continue to prefer a negotiated solution and are prepared to negotiate in parallel with our WTO case," said Rich Mills, a spokesman for the United States Trade Representative, by telephone from Washington.

In Brussels, EU trade spokeswoman Claude Veron-Reville had a similar message. "We are not negotiating (right now), but of course the channels of communication remain open."

The decision to investigate the complaints was an automatic one under WTO rules as it was the second request by both sides.

Washington, which has been setting the pace in the dispute, initially went to the WTO with its complaint against the Europeans last October, prompting a tit-for-tat reaction from Brussels.

DOOR REMAINS OPEN

Both sides immediately agreed to put litigation on hold and made a fresh bid to negotiate a solution.

But with no deal in sight, the United States returned to Geneva to seek a ruling from the WTO, and the EU did the same. Both blamed the other for the stalemate.

Even agreeing on who should sit on the trade panel could take a couple of months and a final verdict - after any appeals against the panel findings are heard - is unlikely before the end of next year, trade officials say.

The dispute has come to a head because of Airbus plans for a new regional airliner to compete with Boeing's 787, with the European firm saying it will seek assistance for the launch from financial backers France, Germany, Spain and Britain.

Airbus, owned by Franco-German-Spanish aerospace firm EADS and BAE Systems, overtook Boeing as the world's largest commercial plane maker in 2003.

The United States says the company has received billions of dollars of assistance, including US$6.7 billion in subsidies for its A380 superjumbo.

Brussels says that Boeing has benefitted from even larger amounts of aid through grants from the US state of Washington to keep its plants there and in US defence contracts.

If either is found guilty, then the other could win the right to impose sanctions that far outstrip the record so far - the US$4.0 billion a year that the EU was awarded in a fight with the United States over export taxes.

- REUTERS