U.S. says complied with WTO ruling on Boeing subsidies

GENEVA Mon Sep 24, 2012 6:57am EDT

Boeing flags flutter as an Airbus A380, the world's largest jetliner, takes part in a flying display during the 49th Paris Air Show at the Le Bourget airport near Paris June 25, 2011. REUTERS/Gonzalo Fuentes

Boeing flags flutter as an Airbus A380, the world's largest jetliner, takes part in a flying display during the 49th Paris Air Show at the Le Bourget airport near Paris June 25, 2011.

Credit: Reuters/Gonzalo Fuentes

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GENEVA (Reuters) - The United States said on Monday it had complied with a ruling ordering it to withdraw unfair subsidies to Boeing as tit-for-tat exchanges flared up in the world's largest trade dispute.

The World Trade Organization (WTO) found in March that the U.S. planemaker had received billions of dollars in unfair aid, following an earlier ruling against European support to Airbus.

The United States and the European Union (EU) cannot agree on the severity of the ruling against subsidies to Airbus, which the United States says far outstrip any U.S. government support for Boeing (BA.N).

The U.S. Trade Representative's office said it had met a September 23 deadline to comply with the WTO's findings in a case brought by the European Union in response to the first claim launched by the United States more than seven years ago.

"USTR has been working extensively over the last six months with all of the government entities affected by the March 23, 2012 ruling in this case - including NASA, the Department of Defense, the State of Washington, and the City of Wichita - to ensure full compliance with the United States' WTO obligations," the government agency said in a statement.

The EU's executive Commission, in response, said it needed to check that the U.S. had taken the necessary action to end the subsidies.

"In March this year, the WTO ruled that billions of dollars of subsidies to Boeing were illegal, and the U.S. were given until today to bring those to an end. We will now immediately review their compliance package to check whether the U.S. have taken the necessary steps to end these subsidies and their adverse effects," EU Trade spokesperson John Clancy said in a statement.

The United States has targeted government loans to Airbus, which it says helped the European planemaker compete unfairly to replace Boeing as the world's largest commercial jetmaker.

The European Union says Boeing (BA.N) is unfairly assisted by government research deals and other federal and local measures.

Both sides now claim to have complied with the respective WTO rulings, while the United States has accused the EU of failing to fall into step with the WTO decisions and is threatening up to $10 billion in sanctions.

Boeing said Airbus and its government backers had "thumbed their noses" at the WTO. Airbus is owned by EADS EAD.PA, in which the French government has a stake and the German government has influence via a stake held by Daimler (DAIGn.DE).

"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," Boeing said in a statement.

"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."

After a legal battle that dates back seven years, most observers expect the United States and the European Union will eventually negotiate a settlement to end the row, but warn it could rumble on for years more amid further bickering.

EADS, is now in merger talks with British arms maker BAE Systems Plc (BAES.L), a tie-up that would create the world's largest integrated defense and commercial aviation company, with estimated sales of $92.4 billion, surpassing Boeing's by more than a third, based on 2011 figures.

(Reporting by Tom Miles; Editing by Susan Fenton)

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