WTO upholds ruling on Boeing subsidies

Tue Mar 13, 2012 8:43am EDT
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By Tom Miles and Tim Hepher

GENEVA (Reuters) - The World Trade Organization said on Monday it had upheld the bulk of a ruling that Boeing (BA.N: Quote) received billions of dollars of subsidies to compete with Europe's Airbus EAD.PA, as both sides once again claimed victory in a long-running trade row.

The unfair subsidies included at least $2.6 billion in assistance from space agency NASA, which the WTO's appellate body agreed had allowed the U.S. company to launch its modern 787 Dreamliner, causing "serious prejudice" to Airbus.

The ruling is the latest step in a seven-year dispute involving mutual claims of aid for the world's dominant planemakers and could theoretically lead to retaliation on both sides once the Geneva trade body's procedures are exhausted.

The WTO has already ruled that Airbus received illegal aid through a system of European government loans but the two sides cannot agree on the scope or impact of that ruling.

Most observers expect the United States and the European Union will eventually negotiate a settlement to end the row, but warn it could rumble on for years amid further bickering.

"We are ready to discuss at any moment, provided we are discussing on the basis of good questions," EU Trade Commissioner Karel de Gucht told a news conference in Geneva.

The EU says it complied with WTO findings against Airbus last December, but the United States questions this and is about to go back to WTO compliance referees while threatening to hit the European Union with sanctions worth $7-10 billion.

The United States will have six months to comply with the latest ruling once the WTO has formally adopted it, which it is expected to do at a meeting on March 23.   Continued...

A Boeing 787 Dreamliner aircraft is seen during a media preview at the Aeromexico hangar in Mexico City March 8, 2012. REUTERS/Edgard Garrido