WTO to offer glimpse of highly-sensitive dispute between Airubs and Boeing

The World Trade Organization will on Thursday give the public a glimpse into the row between the U.S. and the European Union over subsidies to rival aircraft makers Boeing Co. and Airbus.

Both parties spent months last year arguing over how to share information about government payments to companies. Now, the U.S. and the EU will allow the airing of their WTO proceedings, though the closed circuit transmission will be carefully censored as many of the allegations involve information Brussels says is confidential.

The U.S. says the Toulouse, France-based manufacturer of jetliners has benefited from billions in illegal aid, development financing, contributions and debt relief from the 27-nation EU and its member states. Brussels accuses Washington of providing vast amounts of hidden support to Boeing through military contracts.

The hearing - which actually takes place Tuesday - focuses solely on European government payments to Airbus. Washington claims EU support for Airbus distorts market prices and had allowed the company to temporarily overtake Boeing as the world's biggest civil aircraft carrier.

But the EU, which last month filed what it called a "robust" defense of its programs, says the U.S. arguments are undermined by Boeing's glowing health and bright future. Airbus, by contrast, fell behind the Chicago-based company on orders in 2006 for the first time in six years and has suffered from a series of production setbacks and leadership crises.

Last week, workers at Airbus plants in France, Germany and Spain staged strikes and protests against a restructuring plan the troubled plane maker said would slash 10,000 jobs across Europe. Officials in France and Germany - whose companies control major stakes in parent company European Aeronautic Defence & Space Co., or EADS - also have clashed over the plan.

Brussels says the launch aid only amounts to government loans for helping develop new planes. It argues that the money is legal because it is repaid as Airbus sells aircraft.

But if sales of new planes such as the troubled A380 superjumbo fall short of forecasts - as is possible given production setbacks - there could be a subsidy shortfall and a net gain for the company, EU officials acknowledge.

The EU filed its own allegations against U.S. state and federal payments to Boeing this week at the WTO. The bloc accuses the U.S. of covering up "unprecedented" subsidies in the state of Washington for the 787 and other Boeing commercial aircraft, and take issue with the research funding the company gets from the U.S. government, a figure 10 times higher than what the EU says Airbus receives.

The WTO is due to issue its final report on the U.S. case against Airbus on Oct. 31 and the EU case against Boeing in April 2008, but the timetable may slip due to the complexity of the cases.

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