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Boeing backs rival in EU row, stands firm on WTO

By Tim Hepher

GENEVA (Reuters) - Boeing threw its weight behind Airbus in a row over European Union airline emissions on Thursday, even as it refused to negotiate a settlement in a separate dispute with its arch-rival over aircraft subsidies.

The chief executive of Boeing Commercial Airplanes joined a chorus of criticism of the EU's Emissions Trading Scheme that will charge airlines for emissions, something Brussels believes necessary to help defeat climate change.

"This is not about Boeing and Airbus; it is about what is best for our customers and how we are going to get the whole industry to reduce its environmental footprint," Jim Albaugh told Reuters.

"I don't think the European ETS approach is the right one. We need to have a standstill on this and work with (UN aviation agency) ICAO and get some international rules in place that everyone can sign up to, and ones that will drive us to make the investments we need to improve the efficiency of airplanes."

Albaugh was speaking after the aviation industry, meeting in Geneva, urged governments to use the UN body to negotiate a global deal on the controversial issue of aircraft emissions.

Nations such as China, India and the United States are unhappy that the EU went ahead with a scheme that applies to their airspace, while the EU says it was forced to act after years of international inaction on air travel pollution.

Airbus last week led industry calls to European leaders to delay the scheme, which it says has disrupted Chinese government approval of dozens of valuable aircraft orders.

Making a rare joint appearance with Albaugh, his chief rival, Airbus Chief Executive Tom Enders told the Geneva conference he was "not amused" about the delays and warned Europe that a carbon trade war would be "very damaging".

Airbus and Boeing compete fiercely for jet orders worth almost $100 billion a year but co-operate on some industry-wide issues and signed a deal together with Brazil's Embraer to study biofuel technology on Thursday.

NO WTO DEAL

Albaugh said Boeing had not benefited from any rift between China and Airbus, but that Boeing expected to sell a "pretty significant number" of 737 MAX and some 777s and 747s to China.

He argued aviation had curbed emissions by 70 percent over 40 years and questioned its treatment compared with other basic industries like construction and cement.

"They get a bunch of carbon credits...They can reduce their emissions and then sell their credits, and so they are almost getting rewarded for the fact they haven't done much."

Albaugh meanwhile rebuffed European suggestions that host governments of Airbus and Boeing should negotiate a settlement to the world's largest trade dispute, an 8-year-old spat at the World Trade Organization over aircraft subsidies.

"I am not sure we are interested in negotiating a settlement, what we are interested in is all parties playing by the same WTO rules," he said.

The WTO has found that both Airbus and Boeing benefited from billions of dollars of subsidies.

The WTO is expected on Friday to adopt a finding that Boeing gained illegal aid from space agency NASA. Washington is expected to move soon to force the EU to comply with an earlier ruling against loan aid to Airbus, while threatening sanctions.

Analysts say the bitter dispute may spill into years of wrangling over compliance before it is finally resolved.

"If there are things we need to do differently we will, and we expect that Airbus will do the same thing," Albaugh said.

Albaugh defended a recent decision to close a Boeing defence plant in Kansas, a state where the WTO found last week that Boeing had also received $470 million in commercial subsidies.

"Would you have us keep a facility open and pay employees where there is no work to put through the plant? We can't do that. We are driven by the realities of the defence budget ... there was just not enough work to sustain that facility."

In yet another trade issue dogging the export-oriented industry, Albaugh rejected criticism by some U.S. politicians of guarantees provided by the U.S. ExIm bank relating to jet sales and predicted Congress would renew their funding within weeks.

Republicans in the Senate on Tuesday blocked efforts to force a vote on renewing the nearly 80-year-old U.S. Export-Import Bank's charter for four more years.

(Editing by James Regan and David Cowell)

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