(Reuters) - The World Trade Organization is poised on Wednesday to open the door to hefty U.S. tariffs on European goods over illegal subsidies for Airbus, pushing a 15-year-old row over support for plane giants to the center of fraught global trade relations.
The WTO has found the world’s two largest planemakers received billions of dollars of unfair subsidies in a pair of cases dating back to 2004 and is expected to allow both sides to impose tariffs, starting with the U.S.
Here are highlights of the feud that has spawned thousands of pages of rulings, triggered threats of tit-for-tat tariffs on goods from plane parts to whisky and left both sides claiming victory while racking up an estimated $100 million in costs.
The U.S. seeks talks with the European Union and Airbus AIR.PA host nations Britain, France, Germany and Spain over alleged unfair subsidies via government loans. Washington also terminates a 1992 U.S.-EU agreement covering support for Airbus and Boeing BA.N. The EU responds by filing a complaint on U.S. aid for Boeing.
The WTO launches twin probes into public support for Boeing and Airbus after bilateral negotiations fail.
Airbus announces a new A350 jetliner for which it will seek further government loans from host nations.
The WTO issues an interim ruling that some European aid provided to Airbus violated a ban on export subsidies - a type of aid deemed most harmful and therefore automatically banned.
The WTO demands a halt to unfair aid for jets including the Airbus A380 superjumbo. It says some government loans for the jet amount to “prohibited” export subsidies. But it rejects a U.S. request to include aid for the newer A350 in the case.
The EU loses an appeal and is given until December to comply. However the WTO drops its finding that the A380 loans are in the “prohibited” category, softening its earlier ruling.
The planemakers clash over the scope of the WTO finding. Boeing says the WTO faulted $18 billion of subsidies to Airbus including $15 billion in loans. Airbus says the amount of subsidy embedded in the loans is far smaller, but neither side can publicly back up its claims since details are redacted.
In the EU’s counter-case alleging $19 billion of support for Boeing from the U.S. government, NASA and various states and municipalities, a separate WTO panel partially backs the EU and rules against aid for Boeing worth at least $5.3 billion.
WTO appeal judges broadly uphold the ruling against U.S. support for Boeing.
Both sides say they have complied with the WTO’s rulings, while accusing the other side of failing to do so. This latest disagreement kicks off a new compliance phase in the dispute, including appeals, that lasts another six years.
Boeing announces the twin-engined 777X and agrees to build it in Washington state shortly after the local legislature agrees $8.7 billion in new tax breaks.
The EU opens a second front in the trade battle by launching a separate complaint against the 777X tax breaks granted by Washington state and this time chooses a faster, all-or-nothing approach by targeting them purely as “prohibited” subsidies - without the usual fallback of a second, softer claim.
After a year-long lull in the main dispute, the WTO says the EU failed to comply with its earlier rulings on Airbus. It also agrees for the first time to target aid for the new A350 but rejects U.S. calls to put this in the “prohibited” category.
In November, the WTO rules tax breaks surrounding the development of the Boeing 777X - the subject of the EU’s second case - did fall into the more severe “prohibited” category.
WTO appeal judges reverse the ruling that the 777X tax breaks are in the “prohibited” column, bringing an abrupt halt to the EU’s second case after only two and a half years - a quick turnover by the standards of the main legal battle. The EU’s original case against aid for earlier Boeing projects - including an earlier version of the same tax breaks - continues.
In that main EU case, the WTO largely clears the United States of maintaining unfair support for Boeing but says it has failed to withdraw the earlier Washington State tax breaks.
The EU appeals this decision, but the WTO does not change its stance in a follow-on ruling, published the same year.
In May, the WTO again rules that the EU has failed to halt all subsidies to Airbus and that these continue to harm Boeing. The United States threatens sanctions on billions of dollars of European products. Both sides enter arbitration to determine the scope of tariffs.
In March, the WTO says the U.S. has again failed to halt subsidized tax breaks to Boeing in Washington state. Once again, the two sides disagree widely in public over the amount of subsidy faulted by the WTO.
In April, the U.S. issues a list of $21 billion of EU products from which any WTO-approved tariffs could be drawn, ranging from planes to food and handbags, to counteract $11.2 billion of harm it says EU subsidies cause the U.S. each year.
The EU issues its own $20 billion list of U.S. imports that could face tariffs for damage from U.S. subsidies.
In June, U.S. sources said they are open to negotiations on an “enforceable mechanism” that could allow Airbus to receive some government funding on commercial terms while addressing the issue of Washington State tax breaks.
Both sides accuse the other of refusing to negotiate any settlement.
In July, the U.S. adds $4 billion of items to the basket of products from which any tariffs against the EU could be drawn.
In September, WTO arbitrators back a U.S. request to impose tariffs on billions of dollars of European goods, according to people familiar with the case.
A parallel decision on EU counter-tariffs is due in 2020.
Reporting by Jonas Ekblom, Andrea Shalal, Tim Hepher; editing by David Evans and Keith Weir
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