Clinton Warns EU Leaders of Possible Airbus Trade Dispute
President Clinton warned European Union leaders they were risking a trade dispute with the U.S. over plans to subsidize Airbus Industrie’s new super-jumbo passenger aircraft, U.S. officials said Monday.
Clinton told the EU officials at a summit in Washington that loans to develop the new A3XX jet must not be made by EU governments on preferential terms. The aircraft will be the largest in the world if it enters service as planned in 2006, a year later than Airbus’ original projection of 2005.
“We have impressed upon them, as did the president today--quite strongly--that funding needs to be on a commercial basis,” said U.S. Trade Representative Charlene Barshefsky. “We have asked that the member state governments disclose the terms on which the funding will be provided.”
Boeing Co.’s stock jumped $3.63, or 5.6%, to close at $68.50 on the New York Stock Exchange. Airbus competes with Boeing in the large commercial airliner market.
Gene Sperling, Clinton’s top economic advisor, said Clinton told European Commission President Romano Prodi and French President Jacques Chirac that if the matter “is not taken seriously, it could be a difficult issue between the U.S. and the EU on trade in the future.”
Barshefsky in June asked the governments of Germany, France and Britain to disclose the terms of the loans they had agreed to give Airbus to finance development of the 550- to 650-seat aircraft, more than 50 of which have already been ordered by airlines around the world.
She said Monday that those governments had so far declined to provide that information.
Boeing has long complained that European rival Airbus receives debt forgiveness and below-market interest rates on government loans, violating a 1992 U.S.-European Union treaty and a 1994 World Trade Organization agreement.
Boeing spokesman Virnell Bruce said the company expects the A3XX project “will go forward, but we believe that it should be on commercial terms.” She said it will be up to the government to determine whether the financing is on such terms.
The stepped-up U.S. pressure comes a week after Virgin Atlantic Airways placed a $3.8-billion order for at least six A3XX aircraft, bringing Airbus to the goal of 50 firm orders it said it wanted before beginning construction.
With the Virgin Atlantic order, Airbus is expected to officially announce today that the A3XX will go into production.
Although the U.S. has been seeking information on Airbus subsidies for months, industry officials described Boeing in August as downplaying the matter, feeling that good relations with its European customers were more important. U.S. officials said they would respect the industry’s feelings.
The matter will be raised Jan. 11 at a meeting in Washington of U.S. and European trade officials concerning civil aviation, said Deputy U.S. Trade Representative Susan Esserman.
