Clinton And Chirac Join Row Over Boeing Merger

Presidents Bill Clinton of the US and Jacques Chirac of France on Thursday stepped into the row over the proposed merger of US aircraft manufacturers Boeing and McDonnell Douglas, sharply increasing transatlantic tensions over the deadlocked deal.

As negotiations to break the impasse between the European Commission and Boeing continued, President Clinton warned his administration would retaliate if the Commission outlawed the merger.

We have a system for managing this through the World Trade Organisation, and have some options ourselves when actions are taken by Europe in this regard, he said.

President Chirac countered that the Commission must stand firm and described the merger as an attack on Europes commercialinterests, a reference to rival aircraft maker Airbus Industrie.

 

But there was still hope on both sides that a trade war could be averted.

I think we are a long way from that and I think well probably avoid it, said President Clinton.

The last sticking point between Brussels and Boeing concerns the critical issue of Boeings exclusive supply deals with three US airlines. The Commission insists that Boeing scrap the 20-year deals altogether, having rejected an offer from Boeing not to sign any more and to shorten those that already exist. Boeing has until Wednesday to meet the demands.

While the Commission insists the deadline for changes has passed, it is unlikely to reject a last-minute deal.

But if Boeing does not sweeten its offer, the Commission will outlaw the merged company in the European Union. It has the power to fine the company up to 10 per cent of its turnover and could penalise European companies doing business with it, even impounding new aircraft delivered to Europe.

President Chirac said he was worried about the position of individual member states which no doubt will be subject to a lot of psychological pressure.

The UK, Germany, Sweden and Finland are understood to be uncomfortable about an EU ban, which they fear would have knock-on effects on other industries. Manufacturers in Europe which supply Boeing include Rolls-Royce, GEC-Marconi and Smiths Industries of the UK, Snecma of France and Messier-Dowty, the Anglo-French maker of landing gear.