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Boeing blasts Germany over Airbus loan

AFP · 23 Mar 2010, 08:23

Published: 23 Mar 2010 08:23 GMT+01:00

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With a final World Trade Organization ruling on US accusations of unfair EU subsidies expected as early as Tuesday, Boeing criticized the German government's move to provide €1.1 billion toward the development of the A350.

"On the eve of such an important decision, it is unfortunate and disappointing to see news reports quoting a senior German official saying that Germany is prepared to provide €1.1 billion for the development of the Airbus A350 - a move that flies in the face of both the expected WTO decision and the rules-based global trading system we've all endorsed," Ted Austell, vice president of Boeing's executive, legislative and regulatory affairs, said in a statement.

A senior German economic ministry official said Sunday that the government was ready to grant a €1.1 billion loan to develop the A350 passenger aircraft.

"As far as we are concerned all pre-conditions have been met and the funds are available," said Peter Hintze, parliamentary state secretary at the ministry of economics, in a statement implying that the conditions were in line with WTO rules.

Airbus, a division of the European Aeronautic Defence and Space Company (EADS), intends to launch the A350 as a rival to Boeing's new 787 Dreamliner.

The €12 billion program is supported by four partner nations: Britain, France, Germany and Spain.

France has announced support of €1.4 billion and Britain is contributing €400 million. The Spanish government remains in discussions with Airbus over its funding offer but reports say it could be around €300 million.

Boeing's Austell also referred to reports of Airbus calling for a negotiated settlement ahead of the WTO ruling.

It is "curious, although not unexpected" to see such reports only 24 hours before the ruling, he said.

On Monday, Rainer Ohler, a spokesman for the France-based Airbus, urged the US and EU to enter negotiations to find "a system that satisfies everyone."

The WTO treats disputes at the government level, and the Boeing-Airbus case pits the US against the 27-nation EU.

"As US officials have repeatedly made clear, there's a place for negotiations, but not on programs and actions declared inconsistent with WTO obligations," Austell said.

"Illegal European subsidies have done great harm to the US aerospace industry. It's time to level the playing field and let companies compete on product, price, innovation, and customer support without market-distorting government subsidies."

Story continues below…

Some analysts believe a clear-cut WTO judgment was unlikely given the complexity of the case.

The US filed the WTO complaint in October 2004, alleging that an accord that allowed the EU to provide up to a third of development costs of new airliners was no longer valid since Airbus was now a major industry player and not the fledgling firm when the deal was struck.

The EU has also filed a complaint against the US on multibillion-dollar state aid to Boeing. A first interim ruling in that case is due to be delivered in June, according to the WTO.

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Your comments about this article

09:20 March 23, 2010 by Celeon
"The EU has also filed a complaint against the US on multibillion-dollar state aid to Boeing. A first interim ruling in that case is due to be delivered in June, according to the WTO."

So basically we once again have two prison inmates pointing the fingers at each other yelling "That guy over there is a criminal" :-D

Its not unexpected that Boeing is so sensitive about aid for the A350 program given that the plane will be the competitor to their current prestige project 787 Dreamliner. ;-)

Just as a interesting history fact :

Did you know that the company's founder William E. Boeing (born with the name Wilhelm) was the first in America born child of the german immigrant family Böing?

His father ,Wilhelm Böing, after which he was named, was a rich german mining engineer.

He changed his name to William Boeing in 1900 when returning from a private school in Switzerland to attend Yale University. Just thought this might be interesting.
09:57 March 23, 2010 by Deutschguy
The US through the Pentagon subsidizes Boeing operations and projects. For the US to claim foul over the same practice in Europe is hypocrisy.
10:48 March 23, 2010 by dbert4
@Deutschguy - I don't believe that either country has politicans which are opposed to hypocrisy.
12:03 March 23, 2010 by punkspop
Living in Europe has given me the opportunity to see that political systems are equally corrupt. Poor Boeing. Karma is a $itch.
12:55 March 23, 2010 by Beachrider
The WTO judgement comes out next week. It will be generally published a couple months later (each side will leak some of it earlier). My bet is that the degree of problem will be judged greater for EU/EADS than for USA/Boeing. We will see.

I wonder if the German officials that chose now to announce something, that is clearly another WTO lawsuit, know what they are doing. I think that Boeing gets the WTO judgement money, no?
14:14 March 23, 2010 by hanskarl
@Deutschguy - The US through the Pentagon subsidizes Boeing operations and projects.

@dbert4 - "I don't believe that either country has politicans which are opposed to hypocrisy."

In the US military contracts are awarded after heavy competition in build ups of new equipment. Companies provide RFP's for military R&D and are awarded dollars to develop the new systems within the required parameters. Only after very stiff competition (and the follow up military/political back patting) does the government pay one group for the awarded contract.

I am not so certain commercial ventures in the US receive huge funding such as Airbus is receiving from the EU. It is very competitive between the various manufacturers and they fund their R&D through their profits.

In the EU you only have one manufacturer, Airbus, which by the way makes tremendously awesome airliners.
18:22 March 23, 2010 by 1FCK_1FCK
hanskarl: No-bid contracts are far more common than a bidding process between several competitors. And corruption is rife. Blackwater/Xe being the most obvious. Not to mention the dozens of contracts that go over the originally announced cost & are years late. The system in the US is hardly w/o its problems.
21:51 March 23, 2010 by Deutschguy
@hanskarl: "Companies provide RFP's for military R&D and are awarded dollars to develop the new systems within the required parameters."

I wish that were true. The parameters are designed by the companies themselves and are passed on to legislative committees, whose members have already or soon will be rewarded with political action committee contributions.

The companies determine the specifications. Legislative staff simply photocopy the specs onto the Congress person's or Committee's letterhead. It is then presented as "original" from the Pentagon or one of the Services. It never was that.

A consultant or more likely several have met and determined these specs. One is usually retired military who now works for the private firm, and the other, conveniently works for the Pentagon, retired from the private firm. It's helpful if one of the consultants formerly worked for a high ranking Congress committee member.

Nice, no?
23:37 March 23, 2010 by Logic Guy
Well, so far, the statements made by celeon are the most entertaining. We all know that there is corruption everwhere. National governments and coporations will always accuse each other of wrong doing, becasue much of time, someone does wrong.

The truth is, some corporations will become so large and powerful, to the point to where they will bascially become a part of a national government.

I once walked by a manufacturing location of the F-16 jet fighter plane. And on the fence that surrounded the building, it said "Property of the United States Government, keep out".

I personally have no problem with this. At such a level, there is stuff that happens that is beyond eveyday citizens.
11:37 March 24, 2010 by Deutschguy
I have lots of problems with that system. It is a self-serving piggy bank from misuse of taxpayer dollars, thereby depriving US citizens of public goods in favor of enriching campaign contributors.

That is basically what the objections of Republicans and Blue Dog Dems were about funding universal health care. There will simply be fewer taxpayer dollars available for pork projects, earmarks, and corporate giveaways. When taxpayer dollars are distributed so widely, the fat cats at the top don't get as much or as much so often.

Unnecessary, fraudulent, and duplicative military spending projects, including "Pentagon R&D" are almost a cliché. It enriches a few; the projects are wasteful and many times unrequested by the Services; and, they actually do very little to add to national security.

Private industry should not be driving defense policy and purchasing, but it does. And, their shills on K Street and Capitol Hill need to stop this practice, which hurts democracy and national competitiveness.
16:04 March 24, 2010 by Hebbellover
I love how informed europeans know so much about America but yet they can't seem to have enough children to sustain their civilization. Leave the aircraft manufacturing and other industry to us, German decendants; the bravest of the village!
16:35 March 24, 2010 by Deutschguy
@hebbellover: I'm American, but I spend much of the year in Germany. (And, I know intimately how Capitol Hill works.)

Germany is not a "civilization".

Your condescension obscures whatever point you were hoping to make.
10:12 March 25, 2010 by trottercarriagehorse
@Hebbellover --condescending is good, its the only way to deal with europeans, sadly being nice will not get you very far- and they don't like us, the US.

And on that note all this outsourcing and contracting like black water just leaves a bad after taste
18:08 March 25, 2010 by Hebbellover
Hmmm...a little testy. Must have struck a sore spot. Listen "Germanic" warriors, get over it, when I see articles where Germans are obsessed with a Lesbian Holocaust memorial. As far as German exports, great to hear, just make sure Daimler keeps bribes flowing!

@ Frenemy I am not going to get into a tit for tat with you, the German Nation has much to atone for and it is not just about jews. I think one should check into some colonies in Africa, China, etc...
21:09 March 25, 2010 by Frenemy
Africa? Ok, I'll give you Namibia and Tanzania maybe. But China?? Please forgive my ignorance and enlighten me regarding German colonies in China...

In any case, at worst, our atonement stops around WWII. Using the same scale (and assuming the colonial exploits stop TODAY), if it were held accountable, the US would be "atoning" until circa 2211 AD for its current exploits)...
18:34 March 30, 2010 by Beachrider
Back to the original point. It is hyperbolic to bumper-sticker the Boeing objection to be a 'Blast from Boeing". At least the quote is in the article.

Boeing wasn't awarded any money to develop the 787. They clearly adapted technology developed from the military C-17, but Boeing did all of the international development arrangements by itself. Airbus/Germany is quid-pro-quo funding for development of the 350. It is a commercial venture, not a military activity. Expect to be back with the WTO on this.

Airbus did file a counterclaim against USA/Boeing, but the proof and damage (in the most elaborate outcome) are lower than Boeing's WTO claim. We will see how that comes out. The claim against EU/EADS is now in the hands of the parties. Publications (and analysis) will be out by June.
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