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Wednesday, March 15, 2006

Airplane-subsidy dispute flares up

By BRADLEY S. KLAPPER
THE ASSOCIATED PRESS

GENEVA -- The United States and the European Union locked horns Tuesday in their WTO dispute over government subsidies to The Boeing Co. and Airbus, with the United States rejecting Brussels' demand for more information on support programs to Boeing.

The dispute, widely expected to be the most complicated and costly in the history of the World Trade Organization, has been subject to legal wrangling at every turn as both sides try to outflank each other.

Authorities said the constant maneuvering by both governments, as well as the difficult questions raised by the dispute, have led to the formal suspension of the WTO's original timetable for completing initial investigations into the two companies' subsidy programs by late July.

The dispute centers on U.S. objections to European government support for Airbus. The United States says the subsidies have distorted market prices and allowed the France-based manufacturer of jetliners to overtake Boeing as the biggest civil aircraft seller. The EU argues that the United States provides vast amounts of hidden support to Boeing through military contracts.

Tuesday, the EU asked WTO's dispute settlement body to enable countries to obtain information from one another on payments made to companies.

The United States has so far refused to share information on 13 government subsidy programs it says are outside the scope of the WTO's investigation, even if Brussels claims its request should automatically activate the procedure.

"The U.S. by continuing to block is violating its basic duty to cooperate," EU negotiator Raimund Raith said on behalf of the 25-nation bloc.

The United States said it was surprising that the EU was asking for further sharing of information, citing previous reluctance from Brussels on the procedure until both sides had agreed to conditions.

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