Inslee Supports Decision for Dispute Settlement Panel over Airbus Subsidies

Inslee Supports Decision for Dispute Settlement Panel over Airbus Subsidies
31 May 2005

U.S. Rep Jay Inslee applauded the U.S. Trade Representative's decision today to confront illegal Airbus subsidies by asking the World Trade Organization (WTO) to initiate a dispute settlement panel.

"Today's decision by the U.S. Trade Representative is welcome news for those of us who want to restore competition to aircraft manufacturing," said Inslee. "This is not a premature decision - if anything, it is long overdue. I told EU trade commissioner Peter Mandelson last year that the subsidies issue needed to be resolved and could no longer be swept under the rug. The aerospace industry needs a level playing field, but right now European governments are injecting subsidies into Airbus like a professional baseball player pumping steroids to gain an unfair advantage in the game."

Inslee continued, "The problem with these subsidies is that they have removed Airbus' risk when developing new aircraft lines. Europe has already announced that it will subsidize Airbus' new A350 to compete with Boeing's 7E7 jetliner. A negotiated settlement to this dispute would be preferable, but Europe has not demonstrated a balanced interest in this effort. The World Trade Organization needs to close down this racket so Europeans can no longer gamble with airplane lines like they are at a Monte Carlo casino, at the expense of American aerospace jobs."

Last year, Inslee attended a transatlantic policy conference in Brussels, Belgium, at which time he raised the Airbus subsidies issue with new EU trade commissioner Peter Mandelson, as well as other European commissioners and members of parliament. In November, Inslee and then-U.S. Rep. Jennifer Dunn also rallied support from a strong bipartisan majority of Congress, two hundred forty of whom signed a letter to then-U.S. Trade Representative Robert Zoellick, to express support for the United States' WTO case against European government subsidies to Airbus.

European subsidies to Airbus have totaled about $15 billion in launch aid, which would amount to a $35 billion debt on Airbus's books if the company had borrowed these funds commercially. These subsidies are risk-free loans that Airbus only has to pay back, at little or not interest, if their airplane is a commercial success. Because launch aid and other subsidies shield Airbus from full commercial risk, Airbus can pursue more aggressive pricing and financing practices than a non-subsidized competitor such as Boeing. Airbus has requested subsidies from Europe for its new midsize A350 aircraft, which will challenge Boeing's planned 7E7 jetliner. European governments have also already committed $3.2 billion in launch aid for Airbus's new A380.

http://www.house.gov/inslee/issues/boeing/wto_panel.html