WTO arbitrators to consider U.S. request for sanctions in Airbus case

By Stephanie Nebehay

GENEVA (Reuters) - World Trade Organization arbitrators will evaluate a U.S. request to impose billions of dollars worth of sanctions on European products after a final WTO ruling that found the European Union had given illegal subsidies to Airbus.

The request for retaliation for losses incurred by rival Boeing in the long-running dispute over claims of illegal handouts for aircraft makers adds fuel to mounting transatlantic trade tensions.

It comes as EU Trade Commissioner Cecilia Malmstrom said in Brussels that she hoped an EU mission to Washington would help ease a trade dispute linked to steel and aluminium but that the bloc is preparing a list of U.S. imports to hit if the United States imposes tariffs on EU cars.

The United States made the request to the WTO last Friday for three judges to set the level of retaliatory sanctions, the global watchdog said in a document posted on Thursday which gave no figure for the amount of sanctions sought. The WTO arbitration is expected to take around a year.

The WTO appeals body ruled on May 15 that the EU had failed to remove subsidised government development loans for the world's largest airliner, the A380, and Europe's newest long-haul jet, the A350, causing losses for Boeing and U.S. aerospace workers.

It was the first of two key planemaker subsidy decisions due this year. The European Union has been locked in a parallel, long-running row with the United States over prohibited support it says Washington has given Boeing, and Malmstrom has said she wants to get that judgment on the table too before starting any negotiation.

The EU told the WTO Dispute Settlement Body two weeks later that it had acted within days of the ruling in the 14-year-old case to bring its funding of Airbus into line with WTO rules, a trade official who attended the meeting said.

But a U.S. representative at the WTO meeting said it was hard to give credence to the EU's assertion, after four previous rulings that had disagreed with similar EU claims to have brought Airbus's financing into line with market benchmarks.

The United States, in its initial request in December 2011, said that based on data at the time, it estimated the annual value of lost sales at between $7 billion and $10 billion.

(Reporting by Stephanie Nebehay; Editing by Alison Williams and Hugh Lawson)