U.S. renews WTO case against Airbus, with September deadline

The U.S. set out its claims that European government spending on Airbus SAS to develop new planes is illegal, fixing for the first time a deadline for a World Trade Organization decision on the fight with Boeing Co.

The U.S. says Airbus, the world's biggest maker of commercial aircraft, has benefited from risk-free grants worth $23 billion over the past four decades. In September 2004, the U.S. asked WTO judges to find that the financing violates global subsidies rules. Today's filing means an initial, confidential decision in the case is scheduled for next September.

Today's confidential submission "demonstrates that subsidization of Airbus by the EU is inconsistent" with WTO rules, said Gretchen Hamel, a spokeswoman for the U.S. Trade Representative's office from Washington. "We are still willing to negotiate."

The EU and U.S. filed counter-cases in 2004 over aid given to Airbus and Boeing. But those claims were suspended pending negotiations

Together, the cases are the largest ever to go before the WTO.

Airbus will probably decide this month whether to proceed with the A350 model that is designed to challenge Boeing's 787, Chief Executive Officer Louis Gallois said yesterday.

While both the U.S. and the European Commission, the EU's executive arm, have said they're still prepared to find a negotiated solution, efforts stalled earlier this year over the negotiating terms.

Today's filing sets a deadline for any talks, Ted Austell, Boeing's vice president for international policy, said in an interview in Geneva today.

"The submission sets the clock ticking and this should focus the parties on whether there's any prospect for a negotiated settlement," he said. "While we still prefer a negotiated solution, there has been no indication that the commission or the Airbus partner governments are prepared to end launch aid."

Peter Power, a commission spokesman in Brussels, didn't immediately respond to a request for comment.

The U.S. says European governments including France, the U.K., Germany and Spain have provided up to a third of the cost of Airbus projects in the past, with the loans being paid back with interest only if the aircraft is a commercial success.

Airbus may increase spending by 20 percent to $12 billion to develop the A350, a long-range airliner that would be made mainly of lightweight carbon fiber, people familiar with the situation said last week.

"With a new $12 billion Airbus plane about to be launched, it is critical that this issue get resolved either through negotiation or litigation," Austell said.