The EU has asked the World Trade Organisation for permission to levy up to $12bn in punitive tariffs against US goods for Washington’s failure to dismantle illegal subsidies for Boeing, the aircraft maker. The EU request is the highest on record for so-called countermeasures in a WTO trade case and marks the latest turn in a eight year, tit-for-tat fight between the world’s largest civil aircraft… .

The US in December made a similar demand for up to $10bn in countermeasures against the EU after it complained that European governments had not complied with a WTO ruling to remove illegal subsidies for Airbus. Under WTO rules, countermeasures allow a government to raise tariffs on goods from another country to recoup damages. The US and EU have previously hit politically sensitive items, such as Florida orange juice and French cheese.

The Boeing-Airbus dispute dates back to 2004, when each government filed complaints at the WTO, saying the other had lavished vast amounts of illegal subsidies on its civil aircraft maker, such as cheap financing, tax breaks, defense contracts and research and development aid. After years of litigation, both sides were ultimately found to have been guilty, although the sums for Airbus, at about $18bn, were more than four-times higher.

Nkenge Harmon, a spokeswoman for the US trade representative, said: “It is truly difficult to see how the EU characterises the finding against the US as the “worst loss” ever. “The WTO found that the EU granted $18bn in subsidised financing, which caused 342 lost sales for the United States. The WTO found $2bn to $4bn, mostly in subsidised research, against the United States, with 118 lost sales for Airbus,” she added… .

Airbus said the company was “grateful to the EU Commission for taking consequential action,” and urged Boeing to come to the bargaining table. “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.”

Source: Joshua Chaffin, Andrew Parker, and Alan Beattie, “EU seeks $12bn from US over Boeing aid,” Global Economy, September 27, 2012. From the Financial Times © The Financial Times Limited 2012. All Rights Reserved.

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