U.S. threatens sanctions in Airbus battle with EU

Fri Dec 9, 2011 4:51pm EST
 
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By Doug Palmer

WASHINGTON (Reuters) - The United States on Friday rejected a European Union plan to eliminate subsidies provided to Airbus EAD.PA and said it would ask the World Trade Organization for permission to impose trade sanctions that could amount to $7 billion to $10 billion annually.

The move marks a low point in the world's biggest trade dispute, largely centered on European aid for the Airbus A350 aircraft. But an end to the battle over aircraft subsides could be some time away and a negotiated settlement may still be most likely outcome.

The EU has its own case against U.S. support for Boeing

(BA.N: Quote) and resolving that will be part of the final mix.

But U.S. officials exploited a tactical advantage derived from the fact the WTO has already issued a final ruling in the U.S. case against Airbus subsidies while the EU case against Boeing subsidies is still pending.

"The WTO clearly found that every single grant of launch aid to Airbus, for every single aircraft that company produced, was a WTO-inconsistent subsidy that caused unfair adverse effects to U.S. industry and jobs," U.S. Trade Representative Ron Kirk said in a statement.

"Our action today underscores what we have said all along - that the United States cannot accept anything less than an end to this subsidized financing," Kirk said, referring to European "launch aid" loans for Airbus.

The United States is still prepared to negotiate with the EU with the "goal of ending subsidized financing at the earliest possible date," Kirk added.   Continued...