As Boeing started to gamer more orders for the 787,
however, Airbus began to wonder if it too should not
hedge its bets and build a similar sized super-efficient
long-range aircraft capable of flying point to point.
What raised a red flag for the United States was signs
from Airbus that it would apply for $1.7 billion in
launch aid to help fund the development of the A350.
As far as the United States was concerned, this was too
much. In late 2004 U.S. Trade Representative Robert
Zoellick issued a statement formally renouncing the
1992 agreement and calling for an end to launch subsi-
dies. According to Zoellick, "since its creation 35 years
ago, some Europeans have justified subsidies to Airbus
as necessary to support an infant industry. If that ratio-
nalization were ever valid, its time has long passed.
Airbus now sells more large civil aircraft than Boeing."
Zoellick went on to claim that Airbus has received
some $3.7 billion in launch aid for the A380 plus
another $2.8 billion in indirect subsidies including
$1.7 billion in taxpayer-funded infrastructure improve-
ments for a total 0116.5 billion.
Airbus shot back that Boeing too continued to enjoy
lavish subsidies, and that the company had received some
$12 billion from NASA to development technology,
much of which has found its way into commercial jet air-
craft. The Europeans also contended that Boeing would
receive as much as $3.2 billion in tax breaks from
Washington state, where the 787 is to be assembled, and
more than $1 billion in loans from the Japanese govern-
mei-ii-fo-three Japanese suppliers, who will build over
one-third of the 787. Moreover, Airbus was quick to
point out that a trade war would not benefit either side,
and that Airbus purchased some $6 billion a year in sup-
plies from companies in the United States.
In January 2005, both the United States and the EU
agreed to freeze direct subsidies to the two aircraft
makers while talks continued. However, in May 2005
news reports suggested, and Airbus confirmed, that the
jet maker had applied to four EU governments for
launch aid for the A350, and that the British govern-
ment would announce some $700 million in aid at the
Paris Air Show in mid-2005. Simultaneously, the EU
offered to cut launch aid for the A350 by 30 percent.
Dissatisfied, the U.S. side decided that the talks were
going nowhere, and on May 31 the United States for-
mally filed a request with the World Trade Organization
for the establishment of a dispute resolution panel to
resolve the issues.. The EU quickly responded, filing a
countersuit with the WTO claiming that U.S. aid to
Boeing exceeded the terms set out in the 1992 agree-
ment. In early 2007 both sides presented their arguments
to the World Trade Organization. The EU claimed the
Boeing was receiving lavish subsidies from federal, state
and local governments in the United States that will
amount to $23.7 billion. For its part, Boeing argued that