Mandelson Backs EU Airbus Subsidies

The trade commissioner's support for the aircraft maker may intensify a dispute between the U.S. and the bloc

EU member states may subsidise a new Airbus airplane as long as it is according to WTO rules, the bloc's trade commissioner has said in a move that could intensify the spat between the EU and the US following the failure of the global trade round this week. "I'm not saying they couldn't or shouldn't invest. I'm just saying: Make it WTO-compliant," Peter Mandelson said in an interview according to Bloomberg news agency on Thursday (27 July).

Last week, Airbus revamped its troubled A350 midsize jetliner in an attempt to turn the tide for the European partnership, which has been in crisis over product delays and allegations of insider dealing.

The new plane is meant to rival the US' Boeing 787 Dreamliner, launched four years ago.

The EU and the US have been at odds for years over the financing of the airplane makers, each claiming the other benefits from subsidies that breach trade rules.

Airbus, which is based in France, receives loans from the British, French and German governments while Chicago-based Boeing gets indirect subsidies through research grants from defence projects.

A case against the EU was brought to the World Trade Organisation (WTO) by Washington in May 2005 and could prove to be the trade body's biggest case ever.

Officials on both sides of the Atlantic have said they would prefer a negotiated settlement but so far attempts to get talks going have failed after bickering over access to subsidy data delayed the case for more than a year.

And transatlantic trade relations took a turn for the worse this week when Brussels and Washington blamed each other's inflexibility for the failure of the WTO Doha trade negotiations, which collapsed on Monday (24 July) after 5 years of talks.