EU files WTO counter claim against U.S., Boeing
The tit-for-tat dispute between the European Union and the United States over state subsidies for large aircraft manufacturers Airbus and Boeing escalated Tuesday with the EU filing its own request that the World Trade Organization settle the matter.
The United States said Monday it would file suit at the WTO to resolve its complaint that EU member states improperly subsidize Airbus, which has overtaken Boeing as the world’s largest aircraft maker. The EU responded with its own request to open a formal inquiry into what it claims are illegal subsidies to Boeing after negotiations to resolve the trade impasse broke down.
“The United States wishes to talk only about the immediate ending of European launch investment for Airbus, and has never wanted to engage in a serious, even-handed discussion of the much larger subsidy programs for Boeing,” said EU Trade Commissioner Peter Mandelson in a statement. “I am confident that launch investment for Airbus is compatible with WTO rules. I also believe that the United States is vulnerable on what Boeing receives.”
The dispute is shaping up to become the costliest WTO dispute ever.
The EU said the main focus of its concern was subsidies that Boeing received from Washington to locate production of its new 787 aircraft in the state. The EU said tax exemptions and other favors received by Boeing are worth more than $7 billion, not including federal billions of research and development grants from the federal government for space and defense projects that have applications for 787 production.
The EU said its assistance to Airbus was legal under international trade rules because Airbus receives loans that must be repaid while subsidies to Boeing are grants, with no obligation to repay.
Mandelson said he was disappointed that the United States is not willing to discuss his offer to reduce launch subsidies for the Airbus A350, being developed to compete against the 787, by 30 percent in exchange for similar U.S. subsidy reductions. The United States is demanding the immediate halt to all subsidies for Airbus.