NYTimes.com Article: Europe Rejects U.S. Withdrawal From Pact on Aircraft Subsidies

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Europe Rejects U.S. Withdrawal From Pact on Aircraft Subsidies

October 9, 2004
 By BLOOMBERG NEWS





BRUSSELS, Oct. 8 (Bloomberg News) - The European Union said
Friday that it would hold the United States to a 1992
accord that limits aid for Boeing and its European rival
Airbus, responding two days after the United States
announced its withdrawal from the agreement.

The union wrote in a letter, sent after the two sides filed
complaints at the World Trade Organization over aid to
aircraft makers, that it expected the United States to
abide by the agreement. Nullifying the accord is an effort
by the United States to remove limits on subsidies to
Boeing as the company develops the 7E7 Dreamliner, which it
plans to deliver in 2008, the union said.

"They haven't provided grounds for terminating the
agreement, and therefore we don't think it's a
substantiated termination,'' a commission spokeswoman,
Arancha Gonzalez, told a news conference in Brussels.

The dispute threatens to disrupt the financing each plane
maker taps to develop aircraft. It also risks damaging the
$400-billion-a-year trade relationship between the European
Union and the United States.

The United States withdrew from the aircraft-financing
agreement when it filed the initial W.T.O. complaint,
claiming Airbus has received more than $15 billion in
government loans since 1967, helping it overtake Boeing's
lead in aircraft sales. Airbus is based in Toulouse,
France.

The Europeans countered, arguing that Boeing, based in
Chicago, has received $23 billion in aid since 1992.

The agreement calls for Europe and the United States to
meet at least once a year to raise concerns, Ms. Gonzalez
said, and the United States has refused to meet for the
last two and a half years, "which seems to indicate that
they didn't have any.''

Richard Mills, a spokesman for the United States trade
representative's office, said, "The E.U. has not acted in
accord with the agreement, notably in providing production
aid to the A380.''



http://www.nytimes.com/2004/10/09/business/worldbusiness/09trade.html?ex=1098339712&ei=1&en=fd8f6754c3f5d1f0


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