Boeing asks US to intervene over record EU loan to Airbus
US-EU Trade Tensions Resurface Over Airbus Loan
By Tim Hepher and David Shepardson
FARNBOROUGH, England, July 21 (Reuters) - Boeing has asked the U.S. government to press the European Union for transparency over a €3 billion ($3.43 billion) loan package to Airbus, resurfacing potential trade tensions after the two sides extended a tariff truce over jet subsidies.
The request for the U.S. government to intervene comes as Airbus has been talking about the development of a new plane as early as 2030, potentially kickstarting a new wave of competition in the global jet market.
Background: The WTO Dispute and Tariff Truce
Both sides won partial victories in a 17-year battle at the World Trade Organization over mutual claims of aircraft subsidies that led to a wave of Transatlantic tariffs hitting other industries, before agreeing a five-year truce in 2021.
The truce, which was set to expire on July 6, has been extended indefinitely as both sides draw back from a renewed trade war in aerospace.
Boeing's Letter and Concerns
In a letter to U.S. Trade Representative Jamieson Greer, seen by Reuters, Boeing said it had been surprised by a June 29 announcement from the European Investment Bank, the EU lending arm, committing to its largest-ever corporate loan for Airbus.
It asked the USTR to request a "full accounting of the terms of this loan" from the EU and to explain why it was compatible with the 2021 truce agreement, which called for an "open and transparent process."
US Government Response
Greer said on CNBC that USTR is looking at the loan "very closely" and raised with his counterpart in the European Commission and in talks with Boeing.
"We can't accept a situation where companies don't have to operate under market-based systems, where Boeing has to operate and compete against an Airbus that gets unfair loans," Greer said. "If the European Union is giving unfair loans, then we need to take care of it and address it."
Boeing noted that the announcement, which included an initial tranche of €1 billion, came just four days after the EU adopted the decision to extend the standstill agreement.
"At a minimum, the timing of this loan is surprising," Boeing said in its letter.
European Investment Bank and Airbus Response
The EIB said it finances thousands of companies every year and denied offering Airbus any unusual support.
"This is a normal loan, carrying interest, part of the EIB's overall financing activity," a spokesperson said.
Airbus and Boeing declined comment.
The USTR and European Commission did not immediately respond to requests for comment.
Airplane Developments and Future Competition
AIRPLANE DEVELOPMENTS
In its loan announcement, the EIB said the package of loans would support Airbus' long-term investments through 2030.
Boeing noted that this is the same year in which Airbus CEO Guillaume Faury has said Airbus plans to begin the development of an A320neo successor.
Plans for New Aircraft
In an interview with Aviation Week ahead of the Farnborough Airshow, Faury spoke of a new plane in 2030 and disclosed the internal code word for the project, "eAction."
"The timing of this significant loan also coincides with Airbus leadership remarks publicly committing to a launch date of a new airplane, which further raises questions about both the size and the intent of this historic economic assistance package," Boeing's letter to the USTR said.
Boeing's Position on Market Conditions
Boeing has said market conditions are not yet right for a new generation of planes, although analysts say both companies are expected to start the next developments by mid-decade.
Boeing's letter underscores wariness over funding on both sides, though tensions have eased considerably since the WTO subsidy battle.
Political and Trade Implications
The Trump administration last year agreed to exempt airplanes and parts from tariffs after briefly imposing duties on aviation last year.
Washington has not officially said it is extending the separate truce on tariffs tied to the Airbus-Boeing dispute, but four people familiar with the matter said both sides had effectively buried the marathon WTO dispute for the time being.
US Approach to Trade Tools
While the Trump administration has repeatedly used tariffs, it is seen as reluctant to make use of WTO tools that would implicitly recognize multilateral rules the president opposes.
Trump called this month for talks with trading partners to address the impact of foreign jet imports.
Future Negotiations
Boeing's concerns about the EU loan to Airbus could also be raised in those talks, a U.S. official told Reuters. European sources say similar loans were cleared in the WTO dispute.
($1 = 0.8754 euros)
(Reporting by Tim Hepher, David Shepardson; Editing by Sharon Singleton and Nick Zieminski)
