Post-WTO ruling on aviation sector subsidies, US opens doors to negotiations

With WTO rulings on illegal subsidies damning airplane manufacturers on both sides of the Atlantic, the Obama Administration has finally come round to doing what aviation sector specialists have long predicted - open doors to negotiating a settlement of the long and costly war of attrition waged by manufacturers Boeing and Airbus and their respective governments.

The offer was made by US Trade Representative Ron Kirk on Thursday but came attached with a caveat. Kirk said the Americans won't return to the table till the Europeans agreed to stop providing launch aid to Airbus's aircraft development programmes, such as the Airbus A350-XWB, Airbus's response to Boeing's futuristic 787 Dreamliner.

''We have always said, that particularly with Boeing and Airbus dominating the commercial aviation industry, and the reality, it's not like either one of them has fared poorly, that a negotiated resolution would be the best thing,'' Kirk said. ''But we will not yield on our position that the European Union has to allow Airbus to go out and compete on commercially acceptable terms and do so without launch aid.''

Although the World Trade Organization found that every Airbus jet benefited from aid totalling about $20 billion, four European governments have already pledged more than $3 billion in launch aid for the largely composite Airbus A350, which is just beginning production.

A sector specialist noted that the American intent in filing the original trade case against the EU in 2004 was to disrupt public funding for the A350. In turn, he said, the European aim was to find enough dirt to put Boeing on the mat. Both sides have succeeded with their original calculations.

Kirk wasn't specific if the US would file an appeal to a 31 March WTO ruling that Boeing got an illegal $5.3 billion boost from state and federal governments to develop the 787 and other aircraft.  But he added that the Obama administration is ''examining that ruling and we are going to make sure we protect our interests.''