US military to study impact of WTO ruling on Airbus

(WASHINGTON) - The Pentagon said on Wednesday it was studying the possible effect of a WTO ruling on illegal subsidies for Europe's Airbus amid plans to reopen bidding for a contract to build US air refueling tankers.

US Defense Department officials "are looking into that, to see what, if any, impact the WTO decision would have on our dealings with Airbus and others, potentially," press secretary Geoff Morrell told reporters.

"And I don't have anything to report back on what they've come up with. But I can assure you it's being looked at and we'll figure out what the impact is," he said.

The World Trade Organisation ruled last week that the European aviation giant Airbus benefited from illegal subsidies, according to US and European officials, but the decision has not been publicly released.

The WTO ruling comes as the Defense Department prepares to open bidding for a 35-billion-dollar contract to replace the military's aerial refueling tankers.

The politically-charged project has been plagued by disputes and scandal.

The contract for 179 aircraft was initially awarded in February 2008 to Northrop Grumman and its partner EADS, the parent company of Boeing rival Airbus.

But the deal was withdrawn in July last year after Boeing successfully appealed the decision to the investigative arm of the US Congress, the Government Accountability Office.

After the initial decision to give the contract to Northrop and EADS, lawmakers in Congress voiced outrage and accused the Pentagon of unfair treatment towards US-based Boeing.