Airbus, Boeing say they are set for talks in subsidy dispute

GENEVA (AFP) - Airbus and Boeing, the world's two largest plane makers, said yesterday they were prepared to hold talks on subsidy disputes filed before the World Trade Organization more than two years ago.

"It is a pity that Boeing chose the path of litigation. We are ready to negotiate at any time, but it takes two to tango," Airbus' director of European affairs Geoffrey Shuman told reporters in Geneva.

He spoke following meetings of a WTO panel set up to hear US charges of European financial aide to Airbus that could in principle lead to a ruling in December.

"The US say they are ready to negotiate but they tell us we first have to unilaterally give up reimbursable launch investment without any similar concession on their sides," he added. "We could not support the EU entering a negotiation on that basis."

Airbus and Boeing launched reciprocal complaints at the WTO over subsidies to the two companies in October 2004.

Previously, both parties had been bound by a 1992 treaty limiting subsidies to each of them.

According to Boeing vice president Ted Austell: "The US has continued to communicate its willingness to engage in constructive negotiations when and should that time present itself. It has not yet."

A second body looking into European Union complaints against alleged US aid to Boeing is to begin its work in late September and in theory complete it in early 2008.

Washington is targeting European government loans to Airbus for the launch of new models, while Brussels objects to assistance to Boeing from US state governments, the US Defense Department and the space agency NASA.

"The issues have narrowed themselves. There is no question launch aid is a subsidy, the question is how much," said Bob Novick, a lawyer advising Boeing.

Commercial law specialists expect both companies to be found in violation of subsidy regulations and say that regardless of any future WTO rulings, Airbus and Boeing will have to renegotiate a bilateral agreement on future state aid.

The US group indicated that recent top management changes at troubled Airbus and its parent company EADS along with political changes in Europe could help pave the way to a negotiated settlement of the dispute.

Both France and Germany have state holdings within EADS but both stress the group should be run according to normal industrial criteria.

Britain and Spain have also provided launch aid to Airbus according to US officials.

"There's a lot of new leadership both within Airbus and also within the member governments," Austell said.

"Perhaps when all the stakeholders get together and sort out the challenges that are still before the Airbus entreprise, there will be a rationale to move forward with a negotiated resolution to this matter."