EU seeks $12 bn yearly sanctions against US over Boeing
(BRUSSELS) - Brussels on Thursday sought WTO approval for trade sanctions against Washington worth $12 billion a year, the latest twist of a long-running EU-US row over subsidies to aviation giants Airbus and Boeing.
A statement by the EU's executive said it was requesting the World Trade Organization "allow the imposition of counter-measures against the United States" worth $12 billion a year, in what was dubbed the largest WTO penalty ever requested.
"This follows the EU's assessment that the United States had not lived up to its obligation to remove its illegal subsidies in the aircraft sector, as required by the WTO," the statement added.
Boeing and its European rival Airbus have been at odds since 2004 over the issue of government subsidies, with both having won and lost complaints filed against the other at the WTO.
The latest move comes on the heels of EU claims this week that Washington failed to meet a September 24 deadline set by the Geneva-based WTO to end illegal subsidies to Boeing.
"We had expected that the US would have finally complied in good faith with their international commitments," EU Trade Commissioner Karel De Gucht said Thursday.
"We are disappointed that this does not seem to be the case. So, the US leaves us with no other choice but to take further legal action."
The $12-billion amount (9.35 billion euros) is "based on estimates of the damages suffered by the EU due to unfair and biased competition from the US industry," the European Commission statement added.
"Airbus is grateful to the EU Commission for taking consequential action," said spokeswoman Maggie Bergsma.
US authorities said last weekend that they had worked for six months with government bodies including space agency NASA, the Defense Department, the northwestern state of Washington and the city of Wichita, Kansas, to ensure conformity with the WTO ruling.
But on Wednesday they counter-attacked, accusing the EU of far greater handouts.
"On the one side we have $90 billion (70 billion euros) of illegal financing of Airbus by the EU and on the other side we have $3.0-$4.0 billion for Boeing," said Michael Punke, US representative at the trade arbiter.
"We have come into compliance and we believe Airbus has not," he told journalists.
The EU said that the WTO's Appellate Body had found that US federal and state governments granted $5.0-6.0 billion in WTO-incompatible subsidies to Boeing between 1989 and 2006.
Subsidies granted after this period "are estimated to be at least $3.1 billion," it added.
The EU has asked for its application to sanction Washington to be discussed at a meeting of the WTO's Dispute Settlement Body on October 23. Brussels committed early this year not to apply sanctions without prior approval from the WTO.
The sanctions would likely be to suspend tariff concessions for US goods or suspend sectoral agreements, an EU source said. But Thursday's request to obtain this approval was "likely to take one to two years", the source added.
The aerospace sector is jealously guarded by governments anxious to keep and boost their countries' high-tech and defence industries. Both Boeing and Airbus also have very significant interests outside the commercial aviation sector.
The latest twist in the dispute comes as British arms maker BAE Systems negotiates a massive tie-up of what would be a major competitor for Boeing with European aerospace giant EADS -- the parent company of Airbus.