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US threatens sanctions over Airbus aid

written by australianaviation.com.au | December 12, 2011
The US is threatening trade sanctions as part of a long running dispute centred on European government support for the Airbus A350 and other aircraft. (Airbus)

The US has asked the World Trade Organization for permission to impose trade sanctions over what it calls an inadequate European Union plan to curtail subsidies to Airbus.

The threat of sanctions, which could amount to between $7 billion and $10 billion a year, opens a new chapter in a long running dispute over EU and US aid to Airbus and Boeing.

The EU said earlier this month that it would comply with a WTO ruling calling for it to end illegal subsidies to Airbus that the US says amount to as much as $18 billion a year. That case centred on launch aid for the A350 and other aircraft.

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But the US says the EU’s plan does not go far enough. A careful review of the EU proposal “appears to show that the EU has not withdrawn the subsidies in question and has, in fact, granted new subsidies to Airbus’s development and production of large civil aircraft,” the office of US Trade Representative Ron Kirk said in a statement.

The EU called the threat of sanctions “premature” but said it would review the US claims. The EU has filed its own case against US support for Boeing, which the WTO is expected to rule on early next year.

Analysts said a negotiated settlement remains the most likely outcome and saw the move by the US largely as an effort to leverage the WTO’s ruling against the EU while the case against the US remains unresolved.

Boeing cheered the move, saying it was “disappointed that EADS/Airbus and European governments have failed to comply with the WTO’s landmark ruling against launch aid and other forms of illegal government subsidies that Airbus has received for more than 40 years.”

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