Thursday, July 01, 2010

Airbus: the flying subsidy machines

The incredibly long-running WTO dispute over Airbus subsidies, which we've covered from time to time, has at last come to a head with the WTO ruling that about $20 billion in loans for the A-380 "super-jumbo" and others has comprised illegal export subsidies.

In a grudge match, where neither side is taking prisoners, US Trade Representative Ron Kirk is showing no signs of caring for the finer feelings of the Europeans and has claimed an outright "victory". The so-called launch aid, he said, had "greatly harmed" the US and Boeing, he declared, while his colleague Tim Reif is demanding that EU member states end preferential loans to the aircraft manufacturer.

The timing of this could not be worse, Airbus is hoping that its A-330 will be chosen for the $40 billion air tanker fleet replacement for the USAF. Pressure is now building in Congress to pass legislation to require the Pentagon to take into account illegal subsidies in the tanker competition.

We should be pleased about this, only there are British jobs at stake, and the Americans have tasted blood. Airbus officials, however, says the EU will appeal the ruling, noting that: "There's not a single WTO case that hasn't been changed on appeal." They have 60 days to lodge the appeal.

Oh for those heady, hubristic days of January 2005 when Tony Blair praised the "dedication" of all those involved in the project and said the A-380 was "... the most exciting new aircraft in the world, a symbol of economic strength and technical innovation."

And now it is Call me Dave's turn. Is he going to junk the flying subsidy machine, or will European unity prove to have the stronger pull?