Boeing readies sanctions bid against Airbus

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Boeing is poised to begin lobbying the World Trade Organisation (WTO) for sanctions of up to $10 billion against European manufacturer Airbus, after rejecting claims by the EU that it has ceased providing illegal subsidies.

The latest round in the tit-for-tat dispute, overseen by the WTO Dispute Settlement Body and now entering its eighth year, will see Boeing formally request the establishment of a compliance panel on 13 April 2012. That will in turn pave the way for the international trade organisation to impose punitive measures on Airbus if it is found not to have removed WTO-inconsistent subsidies.

"We refuse to stand by while American businesses and workers are disadvantaged," US trade representative Ron Kirk says in a statement. "The European Union's aircraft subsidies have cost American aerospace companies tens of billions of dollars in lost revenue, which has cost American workers their jobs and hurt their families and communities."

The EU claimed in December 2011 that it had removed all inconsistencies previously flagged up by the WTO, most of which hinged on preferential loans known as reimbursable launch investment. No evidence of compliance was made public, however, and it is further alleged that EU states have provided new subsidies for the Airbus A350 programme, which was not included in Boeing's original 2004 complaint.

For its part Airbus also alleges anti-competitive behaviour against Boeing, resulting in two parallel legal challenges working their way through the WTO.

The long-running dispute has oscillated between favouring either manufacturer. In June 2011, Airbus was deemed to have been provided with $18 billion in subsidised finance covering "every model of large civil aircraft" it produces - outstripping the $5.3 billion in research grants and tax breaks Boeing was found to have unfairly enjoyed. However, last month the WTO upheld its ruling that the pivotal Boeing 787 Dreamliner programme was only possible due to illegal support.

The Dreamliner is the first commercial aircraft built from carbon-fibre composite material, utilising technology and expertise which Airbus says came from anti-competitive collaboration with NASA. The US manufacturer's head-start in the field hindered sales of the competing A330 and A350 models, it claims.

"Boeing has received massive US government hand-outs in the past and continues to do so today," EU trade commissioner Karel De Gucht said in response to the March WTO appeal ruling. "The costs to EU industry from these long-term subsidies run into billions of euros."

If the newly convened WTO compliance panel finds in favour of Boeing, Washington has said it will pursue sanctions of $7-10 billion against Airbus. The process of obtaining retaliatory duties could take up to one year.