Europe to seek sanctions against US over Boeing subsidies

The European Union inched closer to an open trans-Atlantic trade war on Thursday, saying that it would ask the World Trade Organization for the right to impose up to $12 billion in annual trade sanctions against the United States in retaliation for subsidies to Boeing which Brussels says give the plane maker an unfair advantage over its European rival, Airbus.

The move was the latest step in a seven-year battle between the two sides over aircraft industry subsidies, one of the most complex and voluminous cases ever brought before the global trade body.

In a statement, the EU trade commission said it had chosen to seek sanctions after reviewing a list of remedies submitted this week by the US Trade Representative, which it said were insufficient.

“The United States had not lived up to its obligation to remove its illegal subsidies in the aircraft sector, as required by the WTO rulings that clearly condemned US subsidies to Boeing,” the commission said.

A statement from the WTO, which is based in Geneva, said that the European request was expected to be formally submitted at a meeting of the organisation’s dispute settlement body on October 23.

A WTO appellate body affirmed in March that Boeing had received at least $5 billion in improper subsidies from the US government to develop its 787 Dreamliner and other jet models. But in a separate case, the global trade body found that Airbus, too, had benefited from four decades of improper subsidies from European governments.

The earlier ruling against Airbus concluded that the European plane maker had received $15 billion in loans from European governments at below-market interest rates and several billion dollars in grants to build the A380 superjumbo and five other best-selling models. The trade panel did not quantify the savings from the lower interest rates, but said that Airbus could not have introduced many of its models when it did without the loans.

It was not immediately clear if Washington planned to respond to the EU move with a similar request, although in the past US officials have said they could consider $7 billion to $10 billion in retaliatory measures.

Spokespeople for the US Trade Representative and Boeing did not immediately respond to requests for comment.

In a statement, Airbus said it was grateful to the European Commission for “taking consequential action” on its behalf but stressed that it was still prepared to seek a negotiated settlement of the dispute.

“We regret that Boeing continues a legal battle that should have long been resolved by a mutual agreement,” said Maggie Bergsma, an Airbus spokeswoman. “We made offers time and again, but are ready to fight it through if the other side wishes to do so.”

© 2012 The New York Times News Service