Boeing-Airbus battle deepens over EU reparations bid

The EU responded Thursday to a WTO deadline to say how it is making reparations over illegal state aid to planemaker Airbus, but US and Boeing reaction indicated a long-running fight has many more rounds to come. The European Union delivered "a comprehensive package of actions that achieves full compliance" with May World Trade Organization appeal findings in a seven-year-old tit-for-tat trade tussle concerning a four-decade-old race to dominate aviation manufacturing. John Clancy, spokesman for EU trade commissioner Karel De Gucht, said the EU undertakings, negotiated with Airbus partner governments Britain, France, Germany and Spain, covered "all categories of subsidies, all forms of adverse effects and all models of Airbus aircraft covered by the WTO rulings". The Geneva-based WTO had given Brussels until close of business to comply with a ruling that deemed incompatible some EU subsidies, including launch aid for Airbus. These had caused "serious prejudice" to US interests, the WTO said in a lengthy and split May decision. In parallel, the WTO has still to rule on a related European complaint about US aid to Boeing, and the EU immediately threw the ball back at Washington awaiting an appeal verdict on that case early next year. "The EU expects to receive an equally solid set of compliance actions from the United States," Clancy said of the separate case. The Americans, however, were angered by an Airbus statement in which its spokesman Rainer Ohler said the company and its state backers had only to make "limited changes" and had "done what we had to in the allotted timescale". Boeing spokesman Tim Neale said the comment about "limited changes" was "laughable", arguing that in May "the WTO found $18 billion of illegal subsidies to Airbus, and every instance of launch aid to be an illegal subsidy". An EU source, though, said that no figures were contained in the actual appeal findings, and that the sums declared illegal were vastly lower, without detailing how much they were . In addition, at the nub of the argument, the WTO panel also reversed a key finding that financing put up by Germany, Spain and Britain amounted to an export subsidy for the development of the A380 superjumbo. Boeing said in its statement: "In the days ahead Boeing will work with the US Trade Representative to ensure that all of the illegal subsidies have indeed been removed and that full compliance has been achieved. "We expect Airbus and its government sponsors to demonstrate that the practice of market-distorting launch aid -- the most pernicious form of subsidy Airbus was found to have received -- has ended." The US Trade Representative, Ron Kirk, said there would now follow "a careful evaluation" of the EU's announcement, and checks to ensure the EU had "taken the steps necessary to bring itself into full compliance". Stressing that "the WTO ruling on Airbus requires that the EU withdraw its subsidies or remove their adverse effects", he said "the jobs of hundreds of thousands of Americans" needed "a level playing-field". In a comment that betrayed growing tensions generally amid predictions of recession for 2012, Kirk said that US officials would be watching the EU with a wary eye now "in this and all other trade matters". No comment from the WTO is expected before December 19 when a session by its sensitive dispute settlement body is scheduled.