European officials reject SpaceX complaints over launch subsidies

February 26, 2019

By Andrea Shalal

LAMPOLDSHAUSEN, Germany (Reuters) – European space officials on Tuesday rejected complaints by U.S. rocket builder SpaceX that subsidies are hampering its access to the European market, arguing the much larger U.S. market is virtually closed to Europe’s Ariane satellite launch vehicle.

Daniel Neuenschwander, head of space transportation for the European Space Agency (ESA), said efforts were under way to cut costs and stay competitive in a market increasingly dominated by U.S. and Chinese players, but the playing field was not level.

“It’s a tough competition but we should make sure that it is done in a way that is fair,” Neuenschwander told Reuters at the opening of a new German Aerospace Center rocket test site in Lampoldshausen, near Stuttgart. “I think that you better clean your own house before you start to complain about someone else’s.”

SpaceX told the U.S. Trade Representative in a letter dated Dec. 10 and first reported last week that European subsidies to Arianespace, Europe’s primary space launch provider, created an “imbalanced competitive advantage that threatens fair trade”.

ArianeGroup, a joint venture of Airbus and Safran and majority owner of Arianespace, is developing Ariane 6 rocket at a cost of nearly 4 billion euros ($4.55 billion).

SpaceX urged the U.S. government to seek remedies in upcoming U.S.-European Union Free Trade Agreement talks – an appeal that U.S. officials say they are taking very seriously given the growing importance of the commercial space market.

The SpaceX letter, first reported by France’s Les Echos newspaper last week, flagged another potential conflict between Washington and Brussels, already at odds in the trade arena over car and steel exports.

The European Union had no immediate comment but the German Economy Ministry said the EU viewed aid to ESA as fully allowed under World Trade Organisation rules.

Neuenschwander said European officials were focused on completing the Ariane 6 rocket, due to have its maiden flight in 2020 at 40 percent less cost than the current Ariane 5.

“Buy America” laws prevent Arianespace from competing for U.S. government launches, cutting off a huge market at a time when commercial launches are down sharply. European officials also see hidden aid in the fact that SpaceX gets twice as much for U.S. government launches than it seeks in European tenders.

European officials are pushing Berlin to favor Ariane 6 in a competition with SpaceX to launch a German spy satellite called GEORG, said conservative German lawmaker Alexander Throm.

Thomas Jarzombek, the German government’s aerospace and space policy coordinator, told Throm in a letter in January “it really would not make sense to use public funds to develop a new rocket and then not use it for public purposes.”

(Reporting by Andrea Shalal; Editing by Frances Kerry)

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