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Britain Defends Subsidy But Says ‘We’ll Talk’ With PM-Clinton

February 23, 1993

LONDON (AP) _ Britain today denied that European governments unfairly subsidize Airbus Industrie after President Clinton criticized heavy aid to the consortium and vowed retaliation.

Airbus, a four-nation European consortium, produces the A320 and other aircraft that are having increasing success competing with U.S.-made planes on the world market. It has overtaken McDonnell Douglas in sales in North America and is second to financially troubled Boeing Co.

The issue cast a new shadow over talks Wednesday between Clinton and Prime Minister John Major, the first European leader invited to the White House by the new administration.

″Ours is not seen as a subsidy,″ said a spokesman at 10 Downing Street, the prime minister’s office.

″It is launch aid which is repayable through a levy on aircraft sales at a real rate of return,″ the spokesman added, speaking on condition of anonymity as is the policy in the prime minister’s office.

Speaking to Boeing employees Monday in Everett, Wash., Clinton said some of the layoffs in the airline industry were due to competition from Airbus.

″A lot of these layoffs would not have been announced if it had not been for the $26 billion that the United States sat by and allowed Europe to plow into Airbus over the last several years,″ Clinton said.

He added, ″We’ll be seeking tough new discipline on those subsidies.″

British officials said the British share of government subsidies to Airbus has been $1 billion since 1986, of which Airbus Industrie has so far repaid $202 million.

The European defense of the aid rests on an agreement with the United States reached last July.

The deal followed years of wrangling between the Americans and the Europeans over what Washington regarded as unfair subsidies and what the Europeans saw as a way of stopping a U.S. monopoly on civilian aircraft manufacture.

The Europeans also argue that American manufacturers benefit from indirect subsidies from military programs and other U.S. government agencies.

The successful A320 was launched in 1988, and the new A330 and A340 aircraft started deliveries this month.

Airbus is not on the agenda for Wednesday’s talks. But the Downing Street spokesman said, ″We’re very happy to talk this round if the president wanted that.″

Opposition Labor Party spokesman Derek Fatchett said, ″I worry about the president’s language. He’s clearly protectionist.″

Said Menzies Campbell, spokesman for the centrist Liberal Democratic Party: ″John Major should tell President Clinton this week that the way in which to deal with these matters is to discuss them across the table, not to engage in megaphone diplomacy in front of cheering Boeing workers.″

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