The European Union requested the World Trade Center allow it permission to set trade sanctions worth up to $12 billion annually in retribution because the United States has not ended subsidies to aerospace company, Boeing Co., which WTO said violated international trade rules, last year.
The motion marked another section in the trade saga between the US and the EU over subsidiaries which the governments allot to their respective aircraft makers, Boeing and Airbus, The Wall Street Journalreports.
According to the WTO, both companies made gains from illegal government subsidies which gave them research grants, tax breaks and low-interest loans.
The altercation dates back to 2004, when the United States filed a case which challenged Europe’s support for Airbus, Chicago Tribunereports.
Since the initial case was filed, challenges have gone back and forth and both sides have won victories from the WTO, although both sides continue to argue about the meaning of the decisions.
In the process, the US case is ahead of the EU’s. The United States has said it could seek up to $10 billion in sanctions on the EU if it does not cut illegal government support for Airbus, owned by European aerospace group EADS .
According to a statement released by the EU on Thursday, their actions are preceded by US actions:
“Assessment that the United States had not lived up to its obligation to remove its illegal subsidies in the aircraft sector, as required by the WTO rulings that clearly condemned U.S. subsidies to Boeing.”
The $12 billion figure was “based on estimates of the damage suffered by the EU due to unfair and biased competition from the U.S. industry.”
A senior fellow at the Washington-based Peterson Institute for International Economics, Gary Hufbauer said it is unlikely the WTO will authorize the requested amount for either side.