by MONITOR
Yesterday's successful maiden flight by the Airbus A380 provided a welcome indication that production and technical progress is being maintained with this giant plane while political arguments rage between the European Union and Airbus on the one hand and the United States government and the Boeing corporation on the other. As always the dispute is about the government subsidies provided to aircraft manufacturers to develop new models. Difficulties arise because different countries provide their subsidies in different ways. In the case of the three–nation A380 the money comes mainly in the form of government soft loans known as ”launch aid” intended to cover all the early stages of researching, designing and constructing a new aircraft before it can actually be placed on the market. In the United States they have for decades done things differently, for instance by placing contracts for military aircraft and equipment that have substantial benefits for civilian models also.

For a long time Boeing has had such dominance in the international skies that it saw no need to worry about what the Europeans got up to. But Airbus's success has changed all that and although Boeing has chosen not to compete with the huge Airbus A380 it is very concerned about another new Airbus project, the medium size A350 which will compete directly Boeing's very similar 787 Dreamliner. Boeing sees the A350 as a ”spoiler” in its market and has urged Washington to see that it does not get any significant amount of public money.

This dispute is now being fought at intergovernment level between Brussels, represented by EU Trade Commissioner, Peter Mandelson and the US trade negotiator, until recently Robert Zoellick. It has turned quite nasty with Mr Zoellick accusing Mr Mandelson of ”spinning” his case through the media. Imagine such a thing! The Americans are threatening to drop bi-lateral negotiation and take the dispute into the wider area of World Trade Organisation which would take years and threaten other agreements.

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