US, EU Meet to Resolve Subsidy Dispute
Independent solution sought to Boeing, Airbus riff by December deadline
GENEVA, Switzerland - 11/05/05 - Representatives from the European Union and the US spent a full eight hours yesterday laying the groundwork for talks aimed at resolving the barbed trade dispute between the two over subsidy support for aircraft makers Airbus and Boeing.
The talks, involving legal specialists, are expected to last through today at an undisclosed location in Geneva, according to a spokesman for the Office of the US Trade Representative, who also said that the meeting "would not aim to find a settlement this week."
The EU "provided clarifications for all questions asked, in particular on reimbursable advances [to Airbus], the conditions under which they are granted and the programs concerned," said a representative for EU Trade Commissioner Pascal Lamy.
"Tomorrow we want to examine American support for Boeing, in particular illegal aid, with respect to a 1992 bilateral accord, granted to the 7E7 program," she told the media at a press conference held at the start of the talks.
The US filed a complaint against EU subsidies to Airbus with the Geneva-based World Trade Organization (WTO) early last month with the 25-member European Union countering immediately with a filing contesting indirect US government subsidies for Seattle-based Boeing Commercial Airplane Co.
Under WTO rules, if Washington and the Brussels-headquartered EU are unable to settle their dispute over the world's largest civil aircraft makers on their own by December 6, one of them can ask the WTO to appoint an independent panel to examine and rule on their complaints.
Both sides could be penalized if they don't reach an independent solution as Washington and Brussels would both run the risk of heavy fines levied by the WTO if it rules that subsidies on both sides of the Atlantic are illegal.
Earlier this week, World Trade Organization Director General Supachai Panitchpakdi commented on the transatlantic subsidy fracas slamming both Airbus and Boeing with the charge that both companies are "helping to fuel tensions in the global free trade system."
When asked to comment on the subsidy duel, Supachai said the private sector "was behind many of the recent bruising disputes between the major trading powers."
Referring to the top US and EU trade officials, the subsidy confrontation, he said, "is at the level of the private sector that most of these disputes are here. You're talking about Boeing, this is a private sector initiative, it's not because of [Robert] Zoellick or [Pascal] Lamy."
Supachai said he "hopes the private sector will have a constructive attitude," adding that private companies have the power to determine "how factionalized the multilateral trade system can be."
Companies "should turn to arbitration and consultation between themselves before they lobby governments for litigation," Supachai said.
Trade disputes, he concluded, "are mainly because of a lack of adjustment by the private sector. If they are willing to take up the difficult and painstaking adjustments, probably with the help of governments, then we can avoid quite a number of disputes."
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