Boeing chief says he is trying to avoid trans-Atlantic spat over subsidies

Thursday, September 16th 2004, 10:39 am

By: News On 6

PARIS (AP) _ The chief executive of Boeing Co. says his efforts to end government aid programs for rival aircraft manufacturer Airbus SAS are intended to head off a wider trans-Atlantic dispute over subsidies that could end up at the World Trade Organization.

``I'm not trying to start a firestorm. What I'm trying to do is to keep a firestorm from starting, so that everybody understands our position,'' said Boeing CEO Harry Stonecipher.

He said that, so long as Airbus follows suit, Boeing is willing ``to talk about anything and everything'' in an effort to end the long-simmering trade dispute between the United States and the European Union over state aid to the aircraft makers.

``I hope that an amicable, expeditious and durable agreement can be negotiated that reflects current market and industry realities, and it would be good for everyone,'' said Stonecipher.

He was speaking at a news conference in Paris after meeting with French Transport Minister Gilles de Robien to discuss the dispute.

Both sides agreed in 1992 on a deal that limited subsidies for the world's two largest airplane makers to 33 percent of the production costs for new models.

However, Washington contends that deal needs to be renegotiated, since Airbus has risen to become a global player taking market share from Boeing, which has been forced to cut 40,000 jobs over the past three years.

Stonecipher said a new agreement would be unlikely without an end to aid for future Airbus programs beyond the A380 airplane it is currently working on.

``We are happy to have all issues on the table. We strongly support transparency on all the issues,'' he said. ``But no agreement is likely to be possible that does not involve the cessation of launch aid on Airbus models beyond the A380.''

Both sides disagree what exactly constitutes subsidies, and the EU wants Washington to provide better information, specifically on indirect and sub-federal aid. European governments have said Boeing's multibillion defense contracts, tax incentives and other perks also amount to huge subsidies.

Stonecipher said militaries should pay for research and development costs. He indicated that Boeing would disclose information on defense contracts if Airbus' parent companies, European Aeronautic Defense and Space Co. and Britain's BAE Systems PLC, do so, too.

They ``are bigger defense contractors than Boeing is,'' he said. ``We are perfectly willing to lay all that data out, we can have that discussion _ as long as we lay out the EADS and BAE Systems stuff, as well.''

Stonecipher also defended a $3.2 billion incentive package that Washington state offered Boeing last year to secure the assembly plant for its new 7E7 Dreamliner.

Stonecipher said the Washington package was an aerospace tax break that will benefit French companies that have offices in the state, too, and will only bring money to Boeing when it delivers the first plane in 2008.

``This is not like upfront subsidy or upfront launch aid,'' he said. ``All the money for the 7E7 comes out of the Boeing bank account.''

At recent talks in Brussels, officials failed to agree on reshaping the 1992 accord.

Washington has threatened to challenge the 25-nation EU before the WTO if the bloc continues to subsidize the France-based aircraft producer at the current rate. The EU has warned that it would counter any U.S. challenge at the WTO.