U.S. Threatens $10-Billion Sanctions over ‘Illegal’ Airbus Subsidies

The United States has dismissed claims by the European Union that Brussels has agreed with a World Trade Organization ruling against subsidies to Airbus and announced that it might ask permission to impose trade sanctions of up to $10 billion annually.

According to U.S. Trade Representative Ron Kirk, the United States is still negotiating with the Europeans to end subsidized financing although it failed to comply with the WTO ruling against subsidies to Airbus.

In addition to this, the European governments reportedly have also provided new subsidies to Airbus.

Rival company Boeing said in a statement that it strongly supports all the efforts by the U.S. Trade Representative to seek full compliance with the removal of all the illegal government subsidies to Airbus -- particularly market-distorting launch aid, the most pernicious form of subsidy Airbus was found to have received.

The Financial Times reported that the sanctions, if authorized by the WTO, would be by far the largest in the organization's history. Trade experts say the U.S. is unlikely to retaliate to that scale, but the ruling gives Washington more leverage in its bilateral negotiations with the EU.

In response to this sanction treat, an EU trade spokesperson retorted that they would review the requests before deciding on the nest steps.

The WTO clearly found that every single grant of launch aid to Airbus, for every single aircraft that company produced, was a WTO-inconsistent subsidy that caused unfair adverse effects to U.S. industry and jobs, stated the U.S. Trade Representative.

Earlier this year, the WTO appellate body ruled that Airbus had received around $18 billion in illegal subsidies over many years to help develop a variety of aircraft.