- The Washington Times - Wednesday, March 21, 2007

GENEVA (AP) — Airbus has taken advantage of decades of European subsidies worth the equivalent of more than $100 billion to capture long-standing Boeing Co. customers and become the world’s largest seller of planes, U.S. officials told a World Trade Organization investigative panel.

The strategy will continue to hurt the American plane manufacturer unless the WTO takes action, the United States said in opening its case charging illegal support for Airbus by the European Union.

The European Union rejected the claims, saying the United States has failed to show how financing for Airbus has led to lost sales or lowered prices.

The sides released their prepared statements late Tuesday and yesterday.

Long-term loans granted by European governments at below-market rates have “enabled Airbus to launch a series of large civil-aircraft models at a scale and a pace that would have been impossible without subsidies,” the United States said at the hearing Tuesday.

“Launch aid has enabled Airbus to pursue an aggressive strategy to increase its market share, likewise in a way that would be impossible without subsidies,” it said.

According to international trade rules, government support in manufacturing is illegal if another WTO member can prove that the subsidy has harmed one of its companies or industries.

The United States estimates Airbus received $15 billion in financing from the 27-nation European Union and its member states, saving the company “well over” $100 billion in borrowing costs compared with commercial lending rates, according to the United States.

The EU, which accuses the United States of providing vast amounts of hidden support to Boeing through military contracts, says its launch aid amounts only to government loans for helping develop new planes.

It argues that the money is legal because it is repaid as Airbus sells aircraft. But EU officials acknowledge that if sales of new planes, such as the troubled A380 superjumbo, fail to meet forecasts — as is possible given severe production setbacks — the loan terms could benefit the company.

“If Airbus fails to sell enough of the aircraft to repay the loan, the outstanding balances are indefinitely extended or forgiven,” the United States argued at the hearing.

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