x Abu Dhabi, UAEWednesday 24 January 2018

Rivals to Gulf carriers seek cap on credits

A group of 24 airlines from Europe and the US has called on governments to cap export credits on the sale of passenger jets.

A group of 24 airlines from Europe and the US yesterday called on governments to cap export credits on the sale of passenger jets, the latest salvo in an increasingly contentious dispute over subsidies. The move came on the same day that the UAE Minister of Economy said the threat of protectionism from Europe against Gulf companies was counterproductive and would not weaken the commitment of the Emirates to free trade.

Gulf countries have recently faced an outcry from European airlines and petrochemical companies over what they see as an unfair advantage for state-linked industries. In the letter, the airlines proposed that the cap for export credits on the sale of passenger jets be set at 20 per cent. Tim Clark, the president of Emirates Airline, has said the carrier finances only 20 per cent of its purchases with export credits. Mr Clark also said the airline hoped to increase its order for Airbus 380 jets to 120 from the 90 aircraft the company ordered in June.

Sultan al Mansouri, the Minister of Economy, said the European stance was "not a positive approach". "The world's economies, now, do need each other. Creating protectionism doesn't really help bilateral trade between the different regions, either between the GCC and EU [or] the GCC and other countries. "The way I see it, we need to calm down about these kinds of protectionism issues. "If you look at the issue of airlines as we've seen recently, I do believe that these European economies are based on competition, openness and, at the end of the day, free trade."

The issue of state subsidies in oil-rich Gulf economies is of pressing concern to companies and governments in Europe. In May, talks between the EU and GCC for a free-trade pact broke down over disagreements on tariffs and the European countries' contention that Gulf countries subsidised their petrochemical industry. On Monday, the chief executive of Air France-KLM, Pierre-Henri Gourgeon, called for EU curbs on Gulf carriers such as Emirates, Etihad Airways and Qatar Airways.

Mr al Mansouri said that having seen the benefits of an open economy throughout its history, the UAE would not change its trade policies. "I don't think that there will be any kind of restrictions with any different countries in the world at the present time," he said. * with agencies ghunter@thenational.ae