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U.S. Eyes Up to $10 Billion in Sanctions in EU Aircraft Subsidy Dispute

Tuesday, December 13, 2011
Sandler, Travis & Rosenberg Trade Report

U.S. Trade Representative Ron Kirk announced Dec. 9 that the U.S. is requesting consultations with the European Union concerning its claim of compliance with a World Trade Organization ruling against subsidies provided by European authorities to large civil aircraft manufacturer Airbus. A USTR press release states that the “limited information” in the EU’s compliance notification to the WTO “appears to show that the EU has not withdrawn the subsidies in question and has, in fact, granted new subsidies to Airbus’ development and production of large civil aircraft.”

The U.S. is also requesting WTO authorization to impose countermeasures in this case, which according to USTR would vary annually but in a recent period would have been in the range of $7-10 billion. USTR notes that any actual imposition of countermeasures would not occur until after further WTO proceedings, and many observers believe the dispute will never get that far. USTR Kirk said the U.S. “remains prepared to engage in any meaningful efforts, through formal consultation and otherwise, that will lead to the goal of ending subsidized financing at the earliest possible date.”

EU trade spokesman John Clancy responded that the U.S. request is “premature and not in line with the appropriate sequence of events in WTO disputes,” and an Airbus spokesman called it “just another one of [the United States’] empty claims.”

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