U.S. Threatens Sanctions over Airbus Subsidies

Not only had the EU failed to comply with a World Trade Organization ruling against subsidies to Airbus, European governments have even provided it new subsidies, U.S. Trade Representative Ron Kirk said.

The United States threatened sanctions against the European Union as it rejected Brussels' claim it had eliminated certain subsidies to Airbus deemed illegal by the WTO. Not only had the EU failed to comply with a World Trade Organization ruling against subsidies to Airbus, European governments have even provided it new subsidies, U.S. Trade Representative Ron Kirk said.

Washington said EU documentation filed with the World Trade Organization "appears to show that the EU has not withdrawn the subsidies in question and has, in fact, granted new subsidies to Airbus' development and production of large civil aircraft."

Comment from the European Commission was not immediately available.

Kirk announced the U.S. would seek "consultations" with the EU over the matter, and threatened to impose sanctions as it seeks to defend U.S. aircraft manufacturer Boeing, the key rival of France-based Airbus.

Washington said it was seeking a green light from the WTO to impose "countermeasures" annually, in an amount that would vary but in a "recent period" would have been $7-10 billion.

"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," Kirk said. "Our action today underscores what we have said all along -- that the United States cannot accept anything less than an end to this subsidized financing," Kirk said.

Kirk said the U.S. remained "prepared to engage in any meaningful efforts, through formal consultations and otherwise, that will lead to the goal of ending subsidized financing at the earliest possible date."

Any imposition of countermeasures would not occur until after further WTO proceedings, the USTR noted.

Airbus urged the WTO to evaluate the EU's December 1 report on how it was complying with WTO requirements to eliminate certain subsidies. It also called Washington's statement "nothing but a meaningless additional threat."

Arch-rival Boeing said it was "disappointed" over the failure of EU governments and Airbus to abide with the WTO ruling, and said "this illegal subsidization... must stop now."

"There can be no compliance with the WTO's ruling that ignores any non-commercial launch aid that Airbus is currently receiving for the A350," the Chicago-based company said.

On the December 1 deadline to demonstrate compliance with the WTO subsidies ruling, Brussels said it had delivered to the Geneva-based trade body "a comprehensive package of actions that achieves full compliance."

In its May ruling on the U.S. complaint, the WTO panel said some subsidies, including launch aid to Airbus, had caused "serious prejudice" to U.S. interests. But the WTO decision was split: the panel also reversed a key finding that financing put up by Germany, Spain and Britain amounted to an export subsidy for the development of the A380 superjumbo.

The US move was the latest chapter of the bitterly fought trade dispute with the US over competition in the commercial aircraft sector. Boeing has seen its world dominance eclipsed in recent years by Airbus, a unit of EADS. A parallel EU complaint against U.S. aid to Boeing is also wending its way through the WTO dispute process.

No comment from the WTO is expected on the U.S. complaint before December 19, when a session by its dispute settlement body is scheduled.

Copyright Agence France-Presse, 2011

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish