U.S., EU Fail to Reach Deal on Boeing, Airbus Subsidies

The United States and the European Union failed to resolve their differences over government subsidies to aircraft makers Airbus and Boeing Co., setting the stage for what could be the largest World Trade Organization dispute ever.

The two sides couldn’t reach an agreement, European Union Trade Commissioner Pascal Lamy said after meeting with U.S. Trade Representative Robert B. Zoellick in Washington.

“These subsidies are unfair, and we will pursue all options to end these subsidies -- including bringing a WTO case if need be,” Zoellick’s spokesman Richard Mills said. “We will soon make a determination as to next steps.”

The Bush administration began prodding the European Union in July to rip up a 1992 agreement on government aid to aircraft makers and threatened a WTO case if the EU didn’t comply by ending government loans to Airbus.

Lamy said Thursday that Europe would file a retaliatory complaint, claiming that Boeing’s 7E7 jetliner gets unfair subsidies through the company’s military contracts and its relationship with Japanese suppliers helping to build the 7E7.

“The prospect that we are going to renegotiate the 1992 agreement is now dwindling,” EU spokesman Anthony Gooch said. “It appears like a long- shot.”

The United States says loans from British, French and German governments helped Toulouse, France-based Airbus take the title of world’s biggest plane maker away from Chicago-based Boeing last year.

The EU says Boeing took the U.S. government-financed technology intended for warplanes and used it to develop the 7E7 and is now relying on government-funded Japanese suppliers to complete the airplane.