By Alan Beattie in Washington
The US has rejected European Union claims that Brussels has complied with a World Trade Organization ruling against subsidies to Airbus and has threatened to request permission to impose a potential $7bn to $10bn in trade sanctions.
The sanctions, if authorized by the WTO, would be by far the largest in the organization's history. Trade experts say the US is unlikely to retaliate to that scale, but the ruling gives Washington more leverage in its bilateral negotiations with the EU.
Friday’s US announcement follows a WTO ruling against Airbus subsidies last year, which was partially upheld this year after an appeal. On December 1, the EU issued a report claiming it had complied with the WTO’s decision.
Ron Kirk, US trade representative, said that the compliance report showed the EU was still in violation of the WTO ruling, particularly regarding “launch aid” – state financing for the design and development of aircraft.
“The WTO clearly found that every single grant of launch aid to Airbus, for every single aircraft that company produced, was a WTO-inconsistent subsidy that caused unfair adverse effects to US industry and jobs,” he said.
The episode is the latest twist in a legal saga that dates back to 2004, when the US brought a case against Airbus subsidies to the EU, provoking the European Commission to file a counter-claim against US support for Boeing. A WTO panel earlier this year ruled that the US had also extended illegal subsidies, but an appeal against that decision is still pending.
John Clancy, a spokesman for the European Commission, said that a US move to impose sanctions was “premature and not in line with the appropriate sequence of events in WTO disputes”, but said the EU would continue to review the case.
Boeing strongly backed the US announcement. In a statement it said: “Boeing strongly supports all the efforts by the US trade representative to seek full compliance with the removal of all the illegal government subsidies to Airbus – particularly market-distorting launch aid, the most pernicious form of subsidy Airbus was found to have received.”