* EU request is part of its counter complaint vs U.S.
* U.S. in 2004 filed case against EU on Airbus support
* Analyst: both sides unlikely to win full sanctions sought
By Tom Miles
GENEVA, Sept 27 The European Union on Thursday
asked the World Trade Organization for the right to impose trade
sanctions worth up to $12 billion annually on the United States
in retaliation for illegal U.S. subsidies to planemaker Boeing
The request, which is the largest penalty ever sought from
the WTO, is the latest legal move in what is the world's biggest
trade dispute and one of the longest.
The wrangling dates back to 2004, when the United States
filed a case challenging European support for Airbus and the EU
responded with a counter complaint against U.S. support for
Since then, both sides have won WTO victories against each
other's programs, although they continue to argue over the
significance of the decisions.
The U.S. case is ahead of the EU's in the process, and the
United States has already said it could seek up to $10 billion
in sanctions on the EU for not eliminating illegal European
government support for Airbus, which is owned by European
aerospace group EADS.
The EU said in a statement that its action on Thursday
follows its "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 rulings that clearly
condemned U.S. subsidies to Boeing."
The figure of $12 billion was "based on estimates of the
damage suffered by the EU due to unfair and biased competition
from the U.S. industry", it added.
Airbus said the figure was justified by the WTO's finding
that the effect of the "particularly pervasive" subsidies was
significantly larger than their face value. It also said that
the launch of Boeing's 787 aircraft would not have been possible
without illegal subsidies.
"It is the largest WTO penalty ever requested and it follows
the worst loss a party has seen in the history of the WTO,"
Airbus said in a statement.
Nkenge Harmon, a U.S. spokeswoman for the U.S. Trade
Representative's office, took issue with the suggestion the
United States had suffered a bigger loss at the WTO than the EU
in the two competing cases.
"The WTO found that the EU granted $18 billion in subsidized
financing, which caused 342 lost sales for the United States.
The WTO found 2-4 billion dollars, mostly in subsidized
research, against the United States, with 118 lost sales for
Airbus," Harmon said.
U.S. officials also expressed confidence that the WTO would
agree it has ended its illegal support for Boeing but find that
the EU has continued to provide illegal support for Airbus
planes such as the A350 and the A380.
The deadline for the United States to comply with the WTO
ruling was last Sunday, but the EU has rejected U.S. assurances
that the handouts have stopped.
"We regret that Boeing continues a legal battle that should
have long been resolved by a mutual agreement. We made offers
time and again, but are ready to fight it through if the other
side wishes to do so," Airbus spokeswoman Maggie Bergsma said.
A Boeing spokesman said the statements from both the EU and
Airbus "were riddled with errors."
It is unlikely either side will get WTO authorization for
the full amount of sanctions they have requested, said Gary
Hufbauer, a senior fellow at the Washington-based Peterson
Institute for International Economics.
Still, the prospect of a damaging trade war looms at the
very time that Washington and Brussels have been working toward
a decision at the end of this year on negotiating a
transatlantic trade pact, Hufbauer said.
If the two sides can't negotiate "a new compact" to resolve
the Boeing-Airbus dispute and instead end up slapping duties on
each other's goods, there is little hope that they can reach
agreement on a broader trade pact, he said.