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U.S.-EU trade dispute ongoing
by Staff Writers
Brussels (UPI) Oct 16, 2012

disclaimer: image is for illustration purposes only

The spat between the European Union and the United States over alleged government subsidies to Boeing is far from resolved.

The United States last month said it ended any subsidies to the aerospace and defense giant that may have been in violation of World Trade Organization rules. But the EU late last week said it had not done so.

The European Union has now asked the WTO to establish a compliance panel to address Washington's failure to remove contravening subsidies as directed by the WTO last March.

"Last month, the U.S. claimed to have removed the WTO inconsistencies, but provided no detailed evidence to support its claims," the EU said in a news release. "Rather, it is now clear for the EU that the U.S. has not only failed to properly implement the decision of the WTO but it has even provided new subsidies to Boeing."

Consultations held between the EU and the United States recently failed to resolve the dispute which the Europeans claim is costing European aerospace concerns, such as Airbus, billions of dollars in lost revenue.

According to findings by a WTO Appellate Body report, which was adopted by the WTO Dispute Settlement Body, various U.S. government and state government subsidies that contravened WTO rules amounted to billions of dollars - as much as $6 billion between 1989 and 2006.

The amount of contravening subsidies since 2006 were estimated at $3.1 billion or more.

Specific items the Appellate Body pointed to include $2.6 billion in research and development funding to Boeing from NASA; Department of Defense R&D funding of as much as $1.2 billion; Foreign Sales Corp. export subsidies of $2.2 billion; tax breaks of nearly $3.1 billion for the period of 2006 to 2024 from the state of Washington; and $476 million in subsidies from the city of Wichita, Kan., where Boeing has a facility.

"We had expected that the U.S. would have finally complied in good faith with its international commitments and would have abided by the WTO rulings that clearly condemned U.S. subsidies to Boeing," said EU Trade Commissioner Karel De Gucht. "We are disappointed that this does not seem to be the case.

"So, the U.S. leaves us with no other choice but to insist on proper compliance before the World Trade Organization. We are confident that this process will finally lead to a level playing field in the aircraft sector."

The United States has argued that any subsidies given to Boeing were less than EU subsidies to Airbus, which are worth $18 billion.

The WTO Dispute Settlement Body is expected to meet this week to address the EU complaint.


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