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How US-EU trade war is likely to hurt business of planemakers?

Devdiscourse News Desk | Updated: 16-05-2019 17:52 IST | Created: 16-05-2019 17:08 IST
How US-EU trade war is likely to hurt business of planemakers?
"The trade tensions that we see, we believe they are lose-lose tensions," Faury told reporters on a visit to London. Image Credit: Wikipedia

The United States and the EU have each threatened to impose billions of dollars of tit-for-tat tariffs on planes, tractors and food in the nearly 15-year trans-Atlantic dispute at the World Trade Organization over subsidies to Airbus and Boeing.

Airbus Chief Executive Guillaume Faury has expressed serious concerns over the issue, warning that any further escalation of trade tensions would damage aerospace firms globally, including the European planemaker's U.S. rival Boeing.

"The trade tensions that we see, we believe they are lose-lose tensions," Faury told reporters on a visit to London. Boeing on Wednesday urged the U.S. government, which has the first crack at imposing any tariffs since its WTO process is running several months ahead of the EU's, to restrict reprisals to European aircraft to avoid harming American manufacturers.

But Faury said it would be impossible for such firms to insulate themselves from the worsening trade climate, which has also led to a tariff war between the United States and China. "These tensions and the trade situation are not supportive to any of the players in aerospace," he said.

"We don't think we'll be losing more than the other guys in that situation, but we think it should be resolved in one way or another that enables global businesses like aviation to continue to grow," Faury said. The new Airbus CEO, who stepped up from its planemaking division a month ago, repeated warnings over the impact of Britain's European Union exit while using softer language than predecessor Tom Enders who had threatened to quit the UK.

Airbus, which makes wings in Britain and employs 14,000 people across the country, is using the delay in Brexit to "prepare for all scenarios," Faury said, adding that a no-deal Brexit remained on the table, even if less likely. "Things have basically not changed, and therefore they are worsening. This long-lasting lack of clarity is ... a distraction," he said.

"The UK is really a place where we are part of the ecosystem. Our plants and our sites in the UK are very competitive. We would like this to continue, whatever happens."

ARMS EXPORT ROW

Faury also warned of legal action against Germany over a ban on defence exports to Saudi Arabia. The ban has threatened a long-delayed border security contract with the kingdom, prompting Airbus to take financial charges. Germany went along with a ban in October after the murder of Saudi journalist Jamal Khashoggi in Istanbul, irritating other European arms exporters including France, where Airbus is based.

"It's very important to have clarity on what the rules will be, and how partners understand they can trust Germany as a partner," Faury said. The row comes as France and Germany study a new combat jet, in which Airbus is the industrial partner on the German side.

Chancellor Angela Merkel on Wednesday said Germany's restrictive guidelines could leave its partners in despair and . would have to be more ready to compromise to be considered as a partner.

Faury again dismissed any boost to Airbus from the crisis facing Boeing over its grounded 737 MAX after two crashes. "Safety is paramount to this industry, so we don't see anything positive on the current situation. We think the trust of the passengers and people in aviation is very important when it comes to growth," he said.

European strategists have said Airbus has little long-term interest in destabilising the 737 MAX and triggering a costly new race to develop new models and is worried about the impact of the crisis on certification rules. But day-to-day competition remains fierce and U.S. industry sources have accused Airbus of trying to poach buyers who have yet to finalise MAX deals. Faury said jet demand remained stronger than Airbus - which has limited short-term spare capacity - could meet alone.


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