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Watch the trailer at: http://www.foxsearchlight.com/sideways/index_nyt.html \----------------------------------------------------------/ U.S. and Europe Seek to Settle Boeing-Airbus Dispute January 11, 2005 By ELIZABETH BECKER WASHINGTON, Jan. 11 - The United States and Europe temporarily headed off a multibillion-dollar trade dispute today by deferring complaints before the World Trade Organization over government subsidies to Boeing and Airbus. The Bush administration reached a deal with the European Union to negotiate a new agreement between themselves over the next three months rather than continue a case at the W.T.O. If they fail to do so, the issue could become the biggest trade dispute between the two trading giants. The aim of the negotiations would be to end subsidies to the aircraft industries and agree to "fair market competition" for the development and production of large civilian aircraft in the European Union and the United States. With the profitability of two of their biggest industries at stake, the top trade negotiators for the United States and the European Union reached the agreement on Monday during a marathon three-hour trans-Atlantic telephone conference. "There is much work to be done if we are to be successful in negotiating an ultimate agreement, but today does mark an important step in trying to end subsidies for large commercial aircraft," the United States trade representative, Robert B. Zoellick, said. The agreement was also timely. President Bush is planning to visit Europe next month as part of his campaign to reach out to his European allies, so a trade dispute would have been unwelcome. "This improves the atmosphere," said Ambassador John Bruton, the head of the European Union's commission delegation in the United States. "There was a risk that if this had gone ahead both the U.S. and the E.U. would have had egg on their faces." The United States filed the initial suit against Europe at the W.T.O. in October after the issue became part of the American presidential campaign. Mr. Bush promised to protect the United States aircraft industry from what he called unfair competition from Airbus. The United States wants European countries to end direct loans to Airbus, which it contends has been the beneficiary of as much as $40 billion in government aid through low-interest loans called launch loans. For their part, European trade officials said the United States paid Boeing "massive illegal subsidies that damage Airbus," including tax benefits and subsidized research and development. The European Union filed a counter-suit with the W.T.O. the same day as the original filing by the United States. The long-simmering dispute stems from a 1992 agreement between the two trading partners that outlined how governments could support their airline industries. Talks to review that agreement broke down this year over how to define government subsidies and whether the goal was complete elimination of those subsidies. Since the original agreement, Airbus has surpassed Boeing as the world's leading supplier of commercial aircraft and the two companies are now poised to compete over a new generation of aircraft. Boeing, the nation's largest civil aircraft exporter, was relieved with the new agreement. Boeing's president and chief executive, Harry Stonecipher, said in a statement that he hoped the two sides will reach an agreement to end subsidies and "establish much-needed balance in the commercial aircraft market." The agreement announced today gives the two sides three months to reach an agreement to end subsidies to large civilian aircraft producers. During this cooling-off period, the two trading partners agreed to refrain from pursuing the case at the W.T.O. or paying new subsidies to their airline industries. The agreement to back off from litigation was seen as a relief for the airline industry, which is already reeling from price wars and was not looking forward to paying higher prices for their equipment as the case wound its way through the W.T.O. It also made sense for the companies themselves. "This case should never have gone this far since both sides receive government subsidies but differently," said John Newhouse, who is writing a sequel to his book on the airline industry "The Sporty Game" ( Alfred A. Knopf, 1982). "It's not in their interests at all to carry the dispute to where it would languish for years and eventually lead to the loss of all their government support." http://www.nytimes.com/2005/01/11/business/worldbusiness/11cnd-air.html?ex=1106475411&ei=1&en=e5ab9bbdc63e2e3e --------------------------------- Get Home Delivery of The New York Times Newspaper. Imagine reading The New York Times any time & anywhere you like! 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