Trade tensions build-up

Airbus chief executive Tom Enders joined global concerns over an EU initiative to charge airlines for carbon emissions, saying the bloc's Emissions Trading Scheme (ETS) risks stirring a trade war.

Enders told an aviation conference – held on the eve of the Singapore Airshow on Monday – that he was "very worried" about the potential fall-out "if tensions are not defused."

"What started out as a solution for the environment has become a source of potential trade conflict," he said, adding that "this should be a worry for all of us."

The ETS was introduced on January 1 in the face of strong protests from around the globe. Notably countries like the US, China and India are upset about provisions that force airlines to pay levies for the whole distance of their Europe-bound flights, not just for flying in Europe.

Chinese muscle-flexing

Last week, China banned its airlines from paying the carbon cost without government permission, and announced unspecified measures in retaliation.

For Airbus, China is a strategic market, expected to grow at a rate of 7 percent every year until 2030, and becoming the second-biggest market for new air planes behind the US in that period.

However, last year Beijing already delayed a deal with Airbus for 10 A380 superjumbos worth $4billion (3.02 billion euros), signaling its opposition to the EU's carbon trading scheme.

Airbus was also hit by a Chinese trade ban in the mid-1990s, when Beijing barred imports of wheat and airplanes in retaliation of a French arms deal with Taiwan.

European intransigence

European Union Transport Commissioner Siim Kallas acknowledged the growing global resistance to ETS, and said the EU was willing to be "flexible" in finding a solution.

Kallas refused, however, to bow to international pressure, telling Reuters news agency on Sunday that Europe would be implementing the scheme "with difficulties, with conflicts, with court cases, whatever."

Meanwhile, the International Air Transport Association (IATA) has called for the United Nations to get involved to avoid a trade war.

Andrew Herdmann, a senior IATA representative, told Reuters that the EU's scheme was "simply not going to work", as it would alienate many countries around the world.

"The risk for the airlines – if this generates into a tit-for-tat trade war – is that airlines will be caught in a cross-fire from both sides," he said.

Author: Uwe Hessler (Reuters, AFP)
Editor: Kristin Zeier