EU attempts to hit Boeing with $12bn sanctions

Posted on 27 Sep 2012

The EU filed a request for the World Trade Organisation (WTO) to hit Boeing with $12bn in annual sanctions, arguing that the aircraft manufacturer has failed to address rules and regulations placed on it by the WTO in March 2012.

It is the biggest WTO penalty ever requested and follows the WTO panel’s finding that rival manufacturer Airbus had lost sales due to significant price suppression in the 200‑300 seat large aircraft market. Airbus claims to have lost $45bn in sales.

The report in March confirmed the existence of illegal U.S. subsidies to Boeing – previously identified by the WTO as “at least $5.3bn” with the aircraft manufacturer having to make major changes to comply with the final WTO ruling.

Boeing was given a six months reprieve to implement the judgment that state, local and federal aid supported Boeing’s current commercial aircraft programmes.

The two companies have long disputed subsidies, but Airbus (owned by EADS) receives support through long-term loans rather than cash grants.

The European Union, of which member states France owns 15% and Germany has a stake in Daimler which owns 22.36% of Boeing rival EADS, requested consultations with the US on compliance in the ongoing subsidies dispute on Monday.

The EU says that it has reviewed the announced US measures and alleges that it maintains a series of subsidies, communicating to the WTO that America “maintains specific subsidies that cause present adverse effects to EU interests.”

“However, this is nothing but the next step in a trade conflict that was launched in 2004 by Boeing,” said Airbus spokesperson Maggie Bergsma, who showed that no love is lost between the rival companies. “We made offers time and again but are ready to fight it through if the other side wishes to do so.”

The final verdict from the WTO called for the withdrawal of at least $5.3 bn of federal subsidies already received by Boeing and elimination of an additional $2bn in state and local subsidies due through future schemes.