The United States said that European governments had failed to end illegal subsidies for aircraft manufacturer Airbus and so will be taking the first step at the World Trade Organization toward seeking sanctions on potentially billions of dollars of European goods.
“We refuse to stand by while American businesses and workers are disadvantaged,” U.S. Trade Representative Ron Kirk said in a statement outlining Washington’s intention to ask for a WTO panel to judge whether the European Union had complied with an earlier WTO ruling against government programs for Airbus.
“The European Union’s aircraft subsidies have cost American aerospace companies tens of billions of dollars in lost revenue, which has cost American workers their jobs and hurt their families and communities,” Kirk said.
The United States will formally submit its request at an April 13th meeting of the WTO Dispute Settlement Body, Reuters reports.
It says the earlier WTO ruling shows European governments have provided more than $18 billion in subsidized financing for Airbus, a figure the European side disputes.
If the panel agrees the EU has not removed the offending subsidy programs, then Europe could face punitive duties on potentially billions of dollar of its exports to the United States.
Washington has already said it could seek as much $7 billion to $10 billion in sanctions. The process of obtaining WTO permission to impose retaliatory duties could take up to a year and the amount approved could be less than requested.
The WTO has also ruled that Boeing received some $3 billion to $4 billion in research grants and tax breaks.
The EU says it has already complied with the ruling and presented a document in December outlining its steps.
“We regret that the U.S. has chosen to take this step, since the EU notified its compliance with its WTO obligations in the package of steps taken at the end of 2011, and the U.S. has yet to do the same in the Boeing case,” EU trade spokesman John Clancy said.
DEADLINE HAS PASSED
However, the United States has until Sept. 23 this year to comply with the WTO’s ruling on its subsidies for Boeing, whereas the EU’s deadline to scrap Airbus subsidies was last December.
Speaking of the EU’s claim it has complied already, Kirk’s office said: “However, the EU has not removed its WTO-inconsistent subsidies, and has even provided new ones,” in an apparent reference to European government support to help Airbus develop its latest model, the A350.
Many analysts expect the two sides to reach a negotiated settlement before any sanctions are imposed.
The two sides held talks on the EU’s compliance plan in January but that did not resolve the dispute.
U.S. officials feel they have the upper hand in the transatlantic dogfight. They say the WTO rulings show Airbus was dependent on European government financing to develop “every model of large civil aircraft,” but no similar conclusion was reached about U.S. support programs for Boeing.
“The United States remains prepared to engage with the EU in any meaningful efforts that will lead to the goal of ending subsidized financing at the earliest possible date,” Kirk said.