Europe will hit back tomorrow with its defence against US claims in the ongoing transatlantic trade dispute over unlawful aircraft subsidies.

Airbus was last month accused of driving US rivals Lockheed and McDonnell Douglas out of commercial aviation, as the first details emerge on the USA's case over unlawful aircraft subsidies presented to trade arbiter, the World Trade Organisation (WTO).

In its submission to the WTO, the US Trade Representative (USTR) charged Airbus with conducting a campaign of targeting market share at the expense of profitability, principally through sharp pricing practices.

In documents recently disclosed, the USA gives detailed examples of subsidies it claims Airbus received for infrastructure developments, research and development in addition to highly preferential financial support at state level. The USA says that the combined effect of this support has allowed Airbus an unfair competitive advantage on pricing.

The European Union (EU) says it will present a robust response to the various allegations made by the US in its first written submission and “corrects a number of errors, distortions and mischaracterisations in the US submission”.

The EU's first written submission is not public at this time, but it does intend to issue a public version of its first written submission.

The first WTO hearing into the US’s case is scheduled to take place 20-21 March.

Both sides have agreed that parts of the hearing should be open to the public “in the interest of maximum transparency” and after another round of submissions and hearings, a final report is due on 31 October although that is likely to slip into 2008, as it has in other complex cases.

In March, the EU will table its own claims against the US and what it believes is its massive subsidisation of Boeing at state and federal level in a separate WTO dispute