* U.S. says 'confident' it has complied with WTO ruling
* EU action is latest chapter in long-running saga
By Tom Miles
GENEVA, Sept 25 U.S. aircraft giant Boeing
is still getting U.S. subsidies despite Washington's
claim to have stopped the handouts, the European Union said on
Tuesday in the latest round of the world's biggest trade
The EU's claim came one day after the U.S. Trade
Representative's office said it had complied with a ruling by a
World Trade Organisation dispute panel that found Boeing had
benefited from illegal payments. The United States had until
Sept. 23 to comply.
"We had expected that the U.S. would have finally complied
in good faith with its international commitments and would have
abided by the WTO rulings that clearly condemned U.S. subsidies
to Boeing", EU Trade Commissioner Karel De Gucht said in a
"We are disappointed that this does not seem to be the case.
So, the U.S. leaves us with no other choice but to insist on
proper compliance before the World Trade Organisation. We are
confident that this process will finally lead to a level playing
field in the aircraft sector."
A spokeswoman for the U.S. Trade Representative's office
said the United States was confident it has fully complied with
the WTO ruling against U.S. subsidies for Boeing, but was still
studying the EU's claim it had not.
"Based on our initial review, the EU simply does not account
for many of the changes announced by the United States. For
example, the EU included programs in its request that we made
clear have been terminated," USTR spokeswoman Andrea Mead said.
The U.S. has set out very clearly how it had complied with
the WTO ruling, and the numerous steps it has taken to insure
full compliance, Boeing spokesman Charlie Miller said.
The U.S. is still trying to stop European governments from
subsidizing Airbus, including so-called launch aid for the
Airbus A350 jet, Miller said.
"There is a crystal clear ruling against launch aid
subsidies, yet the European governments are continuing to
provide illegal subsidies for development of the A350," Miller
said. "The U.S. government is pursuing the WTO processes
necessary to bring an end to these subsidies and Boeing fully
supports the actions that the government is taking."
The EU's latest complaint is likely to result in meetings
between the two sides about the EU case against the U.S., Miller
said. At the same time, compliance hearings on the U.S. case are
also taking place. "That is moving ahead rapidly," Miller said.
"It is likely that the compliance panel will make a ruling in
the next few months."
A U.S. industry official, speaking on condition that he not
be identified, said the EU appeared to have decided to challenge
the U.S. submission before it was even filed.
Typically, a country would first ask for more information
and only take action if still dissatisfied, he said.
The EU's complaint is part of a seven-year trade battle over
subsidies for Boeing and Airbus. Washington and
Brussels have both won WTO rulings that the other paid billions
of dollars of illegal subsidies to its aircraft industry.
Both have claimed victory every step of the way. Boeing says
the subsidies paid to Airbus were much bigger, while Airbus
claims the U.S. breach of the rules was much more heinous.
The United States case claims the EU failed to withdraw
subsidies for Airbus as required by Dec 1, 2011, and triggered a
WTO arbitration to claim up to $10 billion. That process is
effectively frozen until the two sides have exhausted other
Many trade experts expect the two sides to attempt to
negotiate a settlement as the legal appeals and counter-appeals
become increasingly entangled.
Such a deal could pave the way to wider agreement on
subsidising large civil aircraft, involving China, Japan,
Brazil, Canada and Russia, which joined the WTO last month.
The industry is so capital-intensive that some experts say
it is impossible to build big planes without government help. A
global pact could set rules for subsidies, avoiding future spats
among WTO members where airliners are built.
Frederico Curado, chief executive of Brazilian planemaker
Embraer, told Reuters on Tuesday he hoped such an
agreement would follow resolution of the Airbus-Boeing dispute.
Speaking on the sidelines of a WTO conference, Curado
recalled a dispute between Brazil and Canada on aircraft
financing 12 years ago that led to the creation of an agreement
on aircraft financing, the Aircraft Sector Understanding.
"Hopefully from those two (WTO dispute) panels between the
EU and United States, a similar framework agreement, a framework
governance, could be reached. I think it will be important for
the whole industry.
"Not only for the EU and U.S. but also for Brazil, for
Canada, for Japan, for China and Russia, especially in those two
countries with a state of capitalism where the frontier between
a company and the state is very blurred. So something like that
would be very important."