Brussels dismisses US claim to have withdrawn Boeing subsidies

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Brussels has rejected US claims to have complied with a World Trade Organisation ruling against illegal subsidies to Boeing, ensuring that the long-running transatlantic trade war over support for large airliner production will continue at least through another round in court.

Boeing and the US had earlier this week declared themselves to be in compliance with a March 2012 ruling to redress what they describe as "relatively small" subsidy infractions deemed damaging to Europe's Airbus - of $5.3 billion or more, ranging from NASA and defence department research grants to Washington state government tax breaks - but after a one-day review the European Commission announced a challenge for non-compliance.

Complaining of a "lack of information in the US notification", the EC has concluded that "the US has neither withdrawn the illegal subsidies granted to Boeing, nor removed their adverse effects.

"The EC even has indications that the US could have actually granted more illegal subsidies to Boeing in the meantime."

The dispute - technically a pair of counterclaims before the WTO by the USA and European Union going back to 2004 - has resulted in rulings against both sides and subsequent appeals, with both sides declaring victory at each step of the process.

As Europe contests the US-Boeing compliance claim, reprisal seems likely. Remarking on the US government's compliance statement earlier this week, Boeing effectively dismissed European claims to have complied with an earlier WTO ruling against some aspects of launch aid from France, Germany, Spain and the UK for the development of some earlier Airbus models. Said Boeing: "Despite a crystal clear ruling against launch aid subsidies, European governments have continued the practice by providing Airbus with billions of taxpayer euros and pounds for its next new product, the A350.

"What is more, the European governments have yet to remove the very substantial subsidies, including those propping up the A380, which the WTO's ruling in June of last year requires them to do.

"The illegal subsidies to Airbus, most importantly the pernicious, market distorting practice of launch aid, must stop. The US government remains committed to ending these subsidies, and Boeing fully supports the actions the US government has taken to ending them."

One lawyer familiar with the cases has predicted "an endless series of compliance disputes" that unless the two sides either walk away from the battle or press for resolution via a global agreement on airliner subsidies.