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Airbus to double U.S. investment

By Hpanchal on October 26, 2012

Seeing an opening in the U.S. manufacturing industry, Airbus officials recently announced plans to double their annual $12 million investment in U.S. manufacturers by 2020.

For now, investment efforts are concentrated in the Southern California region — most notably, the Los Angeles area. This region has seen annual Airbus business and investment of more than $1 billion, according to a company press release. The manufacturer also is looking ahead to its first U.S. production facility, which will be located in Mobile, Ala. Announced in July, the development is expected to be operational by 2015, with the first planes being delivered in 2016.

Airbus has also been in U.S. news for other reasons recently due to its ongoing tete-a-tete with Boeing. The latest development comes straight from the European Union, which has asked the World Trade Organization to issue $12 billion in annual sanctions against the U.S. government. The request stems from what it sees as non-compliance with an earlier ruling by the WTO that found the U.S. government illegally subsidized Boeing. The EU has also requested the formation of a compliance panel by the WTO to investigate the U.S. government’s reluctance to cease federal subsidies to Boeing.

The EU contends Boeing was to stop receiving subsidies as of March, when the WTO decided that Boeing was being supported illegally. According to the EU, the U.S. government claimed that it removed the subsidies last month, but “provided no detailed evidence to support its claims.”

“The United States’ failure to end aircraft subsidies continues to cost European aerospace companies billions of euros in lost revenue,” Karel De Gucht, the EU’s trade commissioner, said in a statement. “By taking action today, the European Union continues to ensure that every one of our trading partners plays by the rules, and that every effort is made to create a level playing field for European companies and workers.”

The WTO’s spring decision gave the U.S. government six months to remove the subsidies. According to the EU’s initial complaint, federal subsidies received by Boeing between 1989 and 2006 equaled $19.1 billion. The panel rejected, though, that some tax breaks were actually subsidies, and found that the federal subsidies actually amounted to at least $5.3 billion.

On September 23, the U.S. government notified the WTO that is had withdrawn the subsidies in question. Four days later, the EU requested that the WTO take countermeasures against the U.S. for failing to eliminate the subsidies. The WTO was scheduled to take up the issue, titled “Measures affecting trade in large civil aircraft,” during its October 23rd meeting.

This is just the latest volley in what has been a long back and forth between Airbus and Boeing over so-called illegal subsidies. The decision by the WTO, and the resultant action of the EU, has pleased Airbus.

“Airbus is grateful to the EU Commission for taking consequential action. However, this is nothing but the next step in a trade conflict that was launched in 2004 by Boeing,” Airbus’ Maggie Bergsma said in a statement.

“Boeing has been denying the decades of government support for years but was finally faced with a sweeping judgment in March. We regret that Boeing continues a legal battle that should have long been resolved by a mutual agreement. We made offers time and again but are ready to fight it through if the other side wishes to do so,” she continued.

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