European aircraft manufacturer Airbus SAS wants Japan to join talks between the United States and Europe about setting new limits on government subsidies for the industry.
European and U.S. officials have agreed to talks next month about whether to replace a 12-year-old agreement that outlines how much government aid Airbus and its principal competitor, Boeing Co., can receive.
Chicago-based Boeing said that the rules allowing Airbus to receive significant government aid to launch new airplanes are outdated, with Airbus having sold and delivered more planes than Boeing last year for the first time. Airbus claims Boeing receives unfair indirect support for its research and development and huge tax breaks from the state of Washington, where it does most of its aircraft assembly.
In a recent interview, Airbus chief executive Noel Forgeard said that Japanese companies, which receive financial aid from the Japanese government, are supplying such a large portion of materials for Boeing's new 7E7 Dreamliner plane that Japan, too, should be subject to subsidy limits. Japan is not subject to the same limits on government support as the United States and E.U. countries.
Airbus contends that suppliers -- not just manufacturers of airplanes -- are major players in the global aviation industry and the subsidies they receive should also be factored into any new global agreement.
"When you speak of 35 percent of the 7E7, it's significant enough to be considered" for any new agreement about "rules of the game," Forgeard said. Japan and Italy, which will provide parts of the fuselage for Boeing's new plane, "have to be part [of the discussions] because of the governments' funding of civil aviation aircraft."
It's unclear whether European officials will push for Japan's inclusion in the talks next month with U.S. trade officials. Spokesmen for the U.S. trade representative's office and the E.U. declined to comment.
The Japanese embassy said in a written statement said Japan had not been contacted by E.U. or U.S. officials about participating in the September talks. Japanese officials met with E.U. officials at the Farnborough International air show last month outside London to discuss the role of government and international business, according to Japan's Ministry of Economy, Trade and Industry.
In meetings with Japanese officials since last year, European officials have been seeking to learn more about how much government support Japanese aircraft suppliers receive from the government, according to a European source familiar with the talks. Japan's support for its companies, Fuji Heavy Industries Ltd., Kawasaki Heavy Industries Ltd. and Mitsubishi Heavy Industries Ltd., began this year, the Japan ministry said. It declined to provide the specific amount of support those firms will receive.
Airbus has raised Japan's involvement as a new bargaining chip, to show that it will look carefully at every potential source of aid Boeing receives, said Richard Aboulafia, an aviation analyst.
"Airbus needs to show there are cards it can play in response to the Boeing anti-subsidy campaign," said Aboulafia, vice president of the Teal Group. "It's a good tactic. It makes clear it's not an immediate, simple game for Boeing and there are complications that could make switching off the agreement hard."
Aboulafia said he doubted that European officials would press too hard for Japan and Italy because it would make reaching an agreement more complicated. If the E.U. and U.S. officials fail to agree on a replacement for the 1992 pact, Boeing and Airbus could become subject to more restrictive rules on subsidies outlined in a 1994 World Trade Organization agreement, he said.
The 1992 agreement between the United States and Europe allows Airbus to receive some direct government support for launch programs of new airplanes and allows for Boeing to receive some indirect government support, such as research and development.
Boeing disagreed that its Japanese suppliers amounted to any subsidy. "That suggestion clearly runs contrary to the 1992 agreement's expressed intent. As both the U.S. and E.U. agreed at the time, this document governs large aircraft manufacturers in the U.S. and E.U. only," said Theodore Austell III, Boeing's vice president for trade policy.