CNN.com - EU�reopens Boeing WTO case - May 31, 2005

CNN.com - EU�reopens Boeing WTO case - May 31, 2005EU reopens Boeing WTO case



(CNN) -- The European Union's trade chief said Tuesday he was "disappointed" with the U.S. decision to proceed with a trade case against the European Union for allegedly providing illegal subsidies to aircraft maker Airbus, the major competitor to U.S.-based Boeing.

Peter Mandelson said Europe would also resume its World Trade Organization case against the United States. Both sides had suspended their cases in January, hoping for a negotiated settlement.

"America's decision will, I fear, spark probably the biggest, most difficult and costly legal dispute in the WTO's history," Mandelson said. "It will be hard fought on both sides, and I can assure you Europe's interests will be deeply defended."

Mandelson said he "went the extra mile" in the search for a solution, "most recently as last week, by proposing an accelerated negotiation in which I was prepared to offer a reduction up to 30 percent investment ... in return for a similar offer on American side.

"But there was no appetite for compromise in Washington," he said.

U.S. Trade Representative (USTR) Rob Portman said Monday the United States would take its case before the WTO because EU member states were going ahead with $1.7 billion in new subsidies to Airbus after the failure of a negotiated settlement.

"The EU's insistence on moving forward with new launch aid is forcing our hand," said Portman in a statement.

The case centers around whether the world's two largest aircraft makers are receiving unfair support from their governments. In January, both sides agreed to put aside their WTO cases to come up with a negotiated settlement. But the 90-day period lapsed without an agreement.

Despite the announcement, Portman said he believed there was still hope for avoiding the WTO case.

"We still believe that a bilateral negotiated solution is possible," he said, "but the negotiations won't succeed unless the EU recommits to ending subsidies."

Mandelson said all that was necessary was for the United States to agree to his proposal and that the U.S. decision to go to the WTO allows Airbus to continue to receive payments from member states.

"Instead, they have chosen the WTO route," he said, "This will take years to resolve."

At the same time, Portman and Mandelson released a joint statement expressing unity.

"We remain united in our determination that this dispute shall not affect our cooperation on wider bilateral and multilateral trade issues," they said. "We have worked together well so far, and intend to continue to do so."

USTR spokesman Richard Mills said the process will begin Tuesday when Ambassador Linnet Deily, who represents the United States at the Geneva-based WTO, asks for the establishment of a dispute settlement panel.

Mills said history demonstrates that settling the dispute is still possible.

"We're the only country to file a WTO case brought against China. We got it resolved before we even formed a panel," Mills said.

Mills said these cases happen all the time but what makes this one unusual is "the size of the case, the players involved, and the media interest."

"This is about us making sure Boeing has a level playing field, and not just Boeing but the hundreds of suppliers that are part of their stream," Mills said.

CNN White House Correspondent Suzanne Malveaux contributed to this report.


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