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US, EU progress in aero trade dispute

The United States and Europe are accelerating efforts to resolve a potentially major trade dispute over aircraft subsidies.

india Updated: May 04, 2006 11:29 IST

The United States and Europe are accelerating efforts to resolve a potentially major trade dispute over aircraft subsidies, the head of Boeing and a senior German government official said on Wednesday.

"I am hopeful it will be negotiated and resolved. I am beginning to see signs that the two governments are increasing the pace of dialogue and I am supportive of that," Boeing Co Chief Executive Jim McNerney told a news conference on Wednesday.

Separately, a senior German government official said in Washington there were signs of movement in talks and that governments hoped to settle the dispute before the WTO began hearings into the matter. "That is the hope," he said, requesting anonymity.

The dispute between Boeing and its European rival, Airbus, was brought to the WTO in May 2005 and the global trade body was due to begin probing the tit-for-tat accusations in June, but those hearings have been delayed.

Top negotiators played down hopes of quick progress on Wednesday. The European Commission said no significant advances had been made in the dispute over billions of dollars in government loans paid to the Toulouse, France-based Airbus, which in turn accuses Boeing of getting aid through Pentagon contracts in the United States.

"We are still trying to hammer down the exact scope of any negotiations," said Peter Power, a spokesman for EU Trade Commissioner Peter Mandelson, adding Brussels continued to favour an eventual negotiated settlement to the dispute which could be the biggest case ever at the World Trade Organization.

"It is in everybody's interests that we start these talks as soon as possible," he said.

The German government official said German Chancellor Angela Merkel and US President George W Bush briefly discussed the dispute in talks in Washington on Wednesday.

"The view from both sides is that it would be a lengthy, costly process" to get the WTO involved, the official said.

But the top US trade negotiator said on Wednesday he did not know of any new push for a breakthrough.

"I am not aware of one," US Trade Representative Rob Portman told reporters in Geneva, reiterating Washington too was hoping for a negotiated solution but that the United States was sticking to its view it had a very strong case.

"We look forward to hearing from the European Union and in the meantime we keep all channels open," Portman said. "We have not stopped talking."

The United States last May filed a case at the WTO, saying "launch-aid" loans made by European governments to help Airbus develop new aircraft violated WTO rules.

The EU hit back with its own WTO case, saying Boeing benefited from a number of indirect subsidies ranging from state tax breaks to government research and development contracts.

"Our hard point (bottom line) is stopping launch aid, but there are other points to negotiate," Boeing's McNerney said, speaking at his first news conference in Europe since taking over as CEO and chairman at Boeing 10 months ago.