European governments tell the US to withdraw illegal Boeing subsidies

Posted on 10 Jul 2012

British, French, German and Spanish ministers expressed their desire to see the withdrawal of rule-breaking US government support for Boeing at Farnborough International Airshow yesterday.

The ministers responsible for the civil aerospace industries in the four countries said the mechanisms of Repayable Launch Investment (subsidies programme) were incompatible with World Trade Organisation (WTO) rules.

The quartet made up of business minister Mark Prisk and his European counterparts Peter Hintze,  German Economics and Technology minister, Luis Valero, Spanish secretary general for industry and SMEs and Frederic Cuvillier, French minister for transports, sea and fisheries, concluded that the US needs to abide by WTO rules in order to allow fair competition between the two aircraft manufacturers.

The ministers are “now looking for assurances that the United States will comply with the WTO appeal ruling that billions of dollars in US subsidies are illegal under WTO rules by withdrawing injurious subsidies or their adverse effects.”

Mr Hintze commented that he hoped matters could come to a sensible conclusion and believed that the WTO case had gone quite positively. “Everybody loses if things descend into a trade war, we have to avoid that,” he said.

Germany is set to purchase a 7.5% stake in aerospace group EADS, the holding firm for Airbus and Eurocopter, from Daimler by the end of 2012. Hintze maintained that he wants to maintain a balance between French and German shareholding, but added that “there will not be too much state intervention.”

The German minister recently expressed dissatisfaction over the proportion of R&D jobs being created in the country despite its heavy backing of Airbus. The new CEO at Airbus, Fabrice Brégier, has made it clear that state influence is bad for business.

Hintze added that Airbus’ globalisation strategy, which includes the building of a new assembly plant in Alabama, USA, will create jobs in the supply chain for all four countries (Germany, France, the UK and Spain).

When asked about its strategy to take on US-based Boeing in its domestic market, Hintze said that it was a realistic ambition for Airbus to compete in the lucrative US market and pointed to the market leading share achieved by of another EADS firm, Eurocopter, as a case in point.

“Moving into US territory to help us become the number one in the aviation sector,” he added.