EU Seeks $12 Billion in Sanctions Versus U.S. Over Boeing

The European Union said it will ask the World Trade Organization to authorize as much as $12 billion in sanctions against the U.S. for failing to withdraw subsidies to planemaker Boeing Co. (BA) that violate global trade rules.

WTO appellate judges found on March 12 that Chicago-based Boeing had received illegal subsidies totaling at least $2.6 billion in the form of U.S. government research and defense contracts and found that this aid had “adverse effects” on Airbus SAS. The U.S. said on Sept. 23 that it had complied with the WTO ruling.

The European Commission, which two days later rejected the U.S. assertion that it had complied, said in a statement in Brussels today that the requested sanctions are “based on estimates of the damages suffered by the EU due to unfair and biased competition from the U.S. industry.”

The dispute between the U.S. and the EU is part of a long- running rift over government subsidies to large civil-aircraft makers. While the Geneva-based WTO can’t force nations or companies to scrap illegal payments, it can authorize retaliatory sanctions against governments that fail to comply with its rulings.

The trade arbiter has also ruled that Toulouse, France- based Airbus (EAD) received illegal subsidies. In December, the U.S. rejected an EU filing saying it had removed the payments that violate global trade rules and asked the WTO to approve between $7 billion and $10 billion in retaliatory sanctions against the 27-nation bloc.

Amount Justified

The request for as much as $12 billion in sanctions is the largest ever to go to the WTO.

The amount “is justified by the WTO panel confirmation that the effect of the subsidies is significantly larger than their face value in light of their ‘particularly pervasive’ nature,” Maggie Bergsma, an Airbus spokeswoman, said in an e- mailed statement.

The U.S. and Europe filed counter-cases at the WTO in 2004 after the administration of President George W. Bush unilaterally walked out of a 1992 aircraft-aid agreement with the EU.

The EU plans to put the request for sanctions to the WTO’s Dispute Settlement Body on Oct. 23, the trade arbiter said in an e-mailed statement.

To contact the reporters on this story: Jennifer M. Freedman in Geneva at jfreedman@bloomberg.net; Rebecca Christie in Brussels at rchristie4@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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