For years the European Union has subsidized Airbus, the France based aircraft manufacturer. Despite cost overruns, production delays and contract cancellations, EU subsidies to the tune of over $100 billion have kept Airbus viable. Finally the American government is responding to these unlawful subsidies.

This week the Bush Administration initiated filings before the WTO arguing that these subsidies will

“continue to hurt the American plane manufacturer.”

The essence of the most recent claim against the EU is that using a sophisticated financing scheme, Airbus is given loans from EU member governments at below market rates enabling

“Airbus to launch a series of large civil aircraft models at a scale and pace that would have been impossible without subsidies.”

Naturally, the EU says that there no evidence showing that these subsidies have any negative impact on American manufacturers.

“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.”

A truly competitive aircraft market for American companies and workers means enforcing the rules, even with our friends, and in this case, it looks like we may be willing to do that.

This entry was posted on Tuesday, April 3rd, 2007 at 9:14 pm and is filed under Manufacturing in the U.S., Enforcing Trade Laws. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.