Military

DATE=3/21/2005

TYPE=CORRESPONDENT REPORT

TITLE=EU / BOEING (L-ONLY)

NUMBER=2-323405

BYLINE=DOUGLAS BAKSHIAN

DATELINE=LUXEMBOURG

CONTENT=

HEADLINE: EU Says Washington Must Make Next Move in Aircraft Subsidy Talks

INTRO: The European Union has called on the United States to clarify whether it is still interested in negotiations to resolve a dispute over subsidies for rival aircraft makers Boeing and Airbus. The negotiations collapsed Friday. Douglas Bakshian reports from Luxembourg.

TEXT: In the past few days each side has blamed the other for the breakdown of the talks, which have been going on for months. European Commission spokeswoman Claude Veron-Reville says that the EU is prepared to go back to the negotiating table, and is waiting for a signal from Washington. She is heard through an interpreter.

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"We feel that the ball is very clearly in the American court and we are waiting for them to clarify their position."

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Washington wants the European Union to stop providing loans to help Airbus develop new aircraft. Brussels, in turn, says Boeing benefits from aid through federal government contracts, Washington state tax breaks, and even Japanese government support for wing and fuselage subassemblies in Japan. Airbus in recent years has passed Boeing as the largest commercial aircraft maker.

Washington and Brussels went into negotiations to avoid a damaging legal fight at the World Trade Organization that could lead to massive trade sanctions on both sides. The dispute adds stress to trans-Atlantic trade ties just as the two sides need to cooperate to advance troubled world trade talks in many other areas.

Diplomats say the apparent collapse of the negotiations reflects the politically sensitive nature of the subsidies on both sides of the Atlantic. EU Trade Commissioner Peter Mandelson says he understands the difficulties, but thinks they can be overcome with further efforts. (Signed)

NEB/DB/KL/MEM