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EU seeks US$12b in sanctions against US

Friday, September 28, 2012    

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BRUSSELS, Belgium — The European Union said that it is asking the World Trade Organisation (WTO) to impose up to US$12 billion ($1.1 trillion) per year in sanctions on the United States as part of a long-running dispute involving government subsidies to plane makers Airbus and Boeing.

The EU said in a statement that the amount was "based on estimates of the damages suffered by the EU due to unfair and biased competition from the US industry", which received US government subsidies.

The action marks the latest salvo in a seven-year dispute between the EU and the US over subsidies to the two plane makers.

Officials from France, where Airbus is based, welcomed the EU's decision.

"The aerospace companies need to have a level playing field in international competition," Foreign Trade Minister Nicole Bricq and Transport Minister Frederic Cuvillier said in a statement. "This conflict has gone on too long now. We must put an end to it and restore fair competition. It is important for European companies and jobs."

An Airbus spokeswoman also praised the EU decision.

"But this is nothing other than the next step in a trade dispute initiated in 2004 by Boeing..." Maggie Bergsma said. "We regret that Boeing continues a legal battle that could have been resolved a long time by mutual agreement.

A spokesman for Chicago-based Boeing did not immediately return a phone call seeking comment.

Boeing and Airbus are fighting over a market believed to be worth more than US$3 trillion over the next decade. The WTO has found fault on both sides.

In March, a WTO appeals panel upheld an earlier finding that Boeing received at least US$5 billion in subsidies that hurt its European archrival and were prohibited under international trade rules. The amount, though, was far less than the European Union had alleged in its complaint.

On Monday, the US claimed it had complied with that ruling by stopping some payouts to Boeing through NASA and the Pentagon and by removing some beneficial tax and funding policies.

The EU has rejected those claims.

Still, the EU has not emerged unscathed from the dispute, either. A WTO panel has ruled that European governments provided US$18 billion in subsidies to Airbus, although not all were deemed illegal.

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