US offers EU a resolution for Boeing-Airbus trade war

The United States has offered to put an end to the long-running aerospace feud between themselves and the EU and offered to remove tariffs on goods such as wine and whiskey if Airbus repay the millions of dollars given in aid to European governments.

This comes shortly following the World Trade Organisation (WTO) approving EU-backed sanctions over the 16-year dispute between Airbus and its transatlantic rival Boeing.

The proposal was made by US Trade Representative Robert Lighthizer a few days before the WTO's ruling. However, the report is unlikely to win support from the EU, who are awaiting an October 26 conference to discuss the $4 million (€3.41 million) in tariffs they plan to levy on the US.

$7.5 billion (€6.4 million) in tariffs over Airbus subsidies have already begun to hit European goods.

The WTO ruled that European government loans to Airbus were gained through low interest rates, while Boeing also received financial aid via illegal tax breaks.

The US's new offer stands to reset the interest rates on past loans to support Airbus development programmes to a level that assumes that as few as half of the projects would succeed.

The repricing could cost Airbus as much as $10 million, which the EU is likely to reject at a time when the European aerospace industry is begging for intervention to stop it going under.

Experts worry the proposal could spark a tariff war, with a European contact telling Reuters the offer was "insulting."

Information about the deal emerged after the US announced it was waiting for the EU to respond to a then-unknown offer to tackle the feud. Similarly, Eu officials said they made a deal with the US that received no response.

Analysts on both sides are trying to strengthen their position ahead of any future negotiations or escalations.

It has been revealed the Airbus only repays government loans when its sales exceed a certain threshold, while loans for weaker sales can generally be waived or delayed.

Airbus argues that the deal favours the taxpayer because successful loan repayments on successful planes as the A320 far outweigh amounts written off on jets that failed to reach sales targets.

The US counter this by saying that smaller loans benefit Airbus by leaving billions on its books, which it can propagate for market advantage.

US sources say that Boeing would benefit indirectly if Airbus finances were purely market-based, although admitted the US itself would not.

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