Europe seeks trade sanctions against US

The European Union on Thursday announced that it is seeking $12 billion worth of annual trade sanctions against the United States and accused the U.S. of failing to abide by a World Trade Organization ruling governing subsidies to aircraft giant Boeing.

The sanctions threat is the latest turn in the decades-long Boeing-Airbus trade war that periodically threatens to undermine European-U.S. relations. The Boeing case involved Defense Department and NASA contracts.

The U.S. has won a victory in a separate case that found European members states illegally subsidized Airbus.

The EU in a statement said that $12 billion would be commensurate with the damage suffered by Airbus by the U.S. failing to end, or remove the effects of, prohibited subsidies.

“This follows the EU’s assessment that the United States had not lived up to its obligation to remove its illegal subsidies in the aircraft sector, as required by the WTO rulings that clearly condemned U.S. subsidies to Boeing,” it said.

The WTO in March called on the U.S. to “withdraw” $5.3 billion in federal aid to Boeing, end $2 billion in state and local aid, and end research grants that were seen as illegally transferring intellectual property to Boeing.

On Saturday, the Obama administration informed the WTO that it believes all the necessary actions were taken. It noted in a statement that the WTO findings against Airbus subsidies found much greater assistance in dollar terms than in the Boeing finding. A compliance panel is already looking at European claims to have withdrawn the subsidies. 

USTR spokeswoman Nkenge Harmon said "we remain confident that the actions we announced on Sept. 23 have brought us into full compliance with our WTO obligations."

"The WTO found that the EU granted $18 billion in subsidized financing, which caused 342 lost sales for the United States.  The WTO found $2-4 billion, mostly in subsidized research, against the United States, with 118 lost sales for Airbus," she added.

Airbus in its own statement made clear that it continues to seek a negotiated settlement to the two cases that would govern future subsidies.

“Boeing has been denying the decades of government support for years but was finally faced with a sweeping judgment in March. We regret that Boeing continues a legal battle that should have long been resolved by a mutual agreement. We made offers time and again but are ready to fight it through if the other side wishes to do so,” spokeswoman Maggie Bergsma said.

---