GENEVA (AFP) - The European Union and the United States spent eight hours in talks on their trade dispute over support for aircraft makers Airbus and Boeing, with US President George W. Bush`s re-election easing the search for a settlement, sources said.
The talks, involving legal specialists, were expected to last for two days at an undisclosed location in this western Swiss city, a US commerce department official said.
In Brussels, the spokeswoman for EU competition commissioner Pascal Lamy said: "We provided clarifications for all questions asked, in particular on reimbursable advances (to Airbus), the conditions under which they are granted and the programs concerned."
"Tomorrow we want to examine American support for Boeing, in particular illegal aid, with respect to a 1992 bilateral accord, granted to the 7E7 program," Arancha Gonzalez added.
The United States lodged a complaint against EU plane development subsidies to Airbus with the Geneva-based World Trade Organisation on October 6, at the height of campaigning in the US presidential race.
The 25-nation European Union immediately countered with action against indirect US government subsidies for Boeing.
Under world trade rules, if Brussels and Washington are unable to settle their dispute over the world`s largest civil aircraft makers by themselves by December 6, one of them can ask the WTO to appoint an independent panel to examine and rule on their complaints.
Experts on Thursday said that further step could bring trouble for both sides and underlined the electoral value of the US complaint about support for Airbus, since the issue had been simmering outside the WTO for several months.
"Now the election is over and Bush has been re-elected, the United States has probably more flexibility to reach some settlement on this", said trade lawyer Brendan McGivern from White and Case.
In Brussels, Gonzalez said in reference to Thursday`s talks: "We did not have any discussions on the next steps, or an eventual extension of the consultation period."
If Brussels or Washington decide to take their dispute further next month, it would take at least six to nine months before the WTO could rule on the dispute.
Both sides could suffer if they take their complaints that far, observers said. They run the risk of heavy fines if the WTO panel ruled that support provided on both sides of the Atlantic was illegal.
"It would be better to find an arrangement that would allow both sides to continue to sin," Jean-Pierre Lehmann, head of the Evian Group think tank on world trade, said.
With the two companies dominating the world`s market for airliners, Lehmann said they maintained a virtual cartel.
"Neither one side nor the other has a completely clean sheet on the issue. Each one pays subsidies, but in a different way. The best thing for them would be an arrangement behind closed doors rather than before the WTO."
But Lehmann also warned that Boeing`s fate was a prominent political issue in the United States and Washington was unlikely to give way.
The US official said the meeting in Geneva would not aim to find a settlement this week.
The WTO fears that the dispute between the world`s top trading powers over billions of dollars of support could paralyse the organisation`s work.
On Monday, World Trade Organisation chief Supachai Panitchpakdi sharply criticised private companies like Airbus and Boeing, saying they were helping to fuel tensions in the global free trade system.
11/04/2004 - 20:23 GMT - AFP