U.S. Wants New Aircraft Deal With EU

Washington would prefer a new accord with the European Union (search) on state aid for aerospace rivals Boeing Co. (BA) and Airbus (search) rather than fight it out at the World Trade Organization (search), a senior official said on Thursday.

The United States and the EU took their fight over billions of dollars in subsidies for the aircraft manufacturers to the WTO on Wednesday, risking an escalation of transatlantic tension over trade issues.

"Our preferred outcome here is a new agreement," said the U.S. trade official, who requested anonymity.

"We certainly continue to be willing to sit down at the table and hammer out a new agreement: it remains to be seen whether the (European) Commission shares that seriousness of purpose," he told reporters in a telephone conference.

Washington filed a case challenging European loans to help Airbus develop aircraft and terminated a 1992 civil aircraft agreement covering government support for the two top aircraft manufacturers.

The 25-nation EU's executive Commission quickly filed a counter complaint against U.S. support for Boeing, which over the past decade has lost its position as the world's largest civil aircraft manufacturer to its European rival.

Airbus, which began as a consortium of French, German, Spanish and British companies, is now co-owned by European aerospace company EADS and Britain's BAE Systems Plc.

In its countercomplaint, the EU said Boeing has received some $23 billion in U.S. subsidies since 1992. That includes about $3.2 billion in tax breaks from Washington state to persuade Boeing to base production of its 200-to-300-seater 7E7 (search) airplane there, EU officials said.

The U.S. trade official said the EU's charge that indirect subsidies were given to Boeing was "a myth."

"To be perfectly honest it is a myth that has been foisted upon European taxpayers for a number of years now to justify continued subsidies, billions of euros, to a very large and profitable company that no longer needs this kind of support."

"I don't think there is any support for this notion that just because a company is a large defense contractor it means that constitutes a subsidy," he said, referring to Boeing's business with the Defense Department and NASA.

Analysts say the U.S. move could help President Bush's standing in Democratic-leaning Washington state, Boeing's industrial heartland, in the close-fought vote.

The official rejected any suggestions that Washington's move was motivated by the presidential election.