The United States and Europe are closing in on a deal to end a 17-year-old dispute over aircraft subsidies and end tariffs, while seeking an elusive consensus on how to address competition from China, people familiar with the matter said on Monday.
The dispute has dragged on since 2004 when the United States withdrew from a 1992 aircraft subsidy pact and took the EU to the WTO, claiming Airbus had managed to equal Boeing's share of the jet market thanks in part to subsidised government loans.In a potentially key breakthrough, the United States has watered down opposition to the principle of future public loans for Airbus but insists they must be demonstrably market-based and notified in advance, people familiar with the talks said.
Under the 1992 subsidy pact, one third of a project could be financed by direct government support such as loans and cleared indirect R&D support up to 4% of a company's revenue. But the rapid rise of China's aerospace ambitions has fuelled Western concerns over a new publicly funded rival. "There's no question that the rise of China's aircraft industry is...on everybody's proverbial radar," U.S. Chamber of Commerce senior vice-president Marjorie Chorlins said on Monday, noting what she described as China's "heavy subsidisation".
In April, for example, Hungary blocked an EU statement criticising China’s new security law in Hong Kong,The Chinese embassy in Washington had no immediate comment on government support for its nascent civil aerospace industry.Britain and the United States came close to striking a more far-reaching aerospace agreement in December that could have forced the hand of Brussels in its own talks with Washington.
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