In a widely-expected move, the United States government has decided to continue with its lawsuit against the European Union at the World Trade Organisation (WTO) over European government subsidies for aircraft manufacturer Airbus. US Trade Representative (USTR) Ron Kirk announced, on 30 March, that he was requesting the establishment of a WTO panel to check whether the EU has complied with a May 2011 WTO ruling against it. Kirk refuted the EU’s claim, made in a December 2011 report, that it had complied with the ruling, saying “the EU has not removed its WTO-inconsistent subsidies and has even provided new ones”. The US is indeed accusing the EU of providing new subsidies to Airbus to support the development of its latest model, the A350.

The panel is likely to be established at a meeting of the WTO Dispute Settlement Body, scheduled for 13 April, but it could take up to a year for the WTO to formally approve the implementation of sanctions on the EU. Should the panel ultimately rule in the US’ favour, Washington may impose retaliatory trade sanctions against the EU. The US has already stated that it could seek between US$7 billion and US$10 billion in said sanctions.

While stating that he regretted the US decision to establish a compliance panel, the European Commission’s trade spokesman, John Clancy, argued that “the EU notified its compliance with its WTO obligations in the package of steps taken at the end of 2011”. He went on warning the US that they had “yet to do the same in the Boeing case”. USTR Kirk argued that “the EU’s aircraft subsidies have cost American aerospace companies tens of billions of dollars in lost revenue, which has cost American workers their jobs and hurt their families and communities”. Boeing employs about 157,000 workers in the US. He added that “the US remains prepared to engage with the EU in any meaningful efforts that will lead to the goal of ending subsidised financing at the earliest possible date”. An EU-US negotiated settlement of the seven-year trade dispute remains possible in parallel with WTO actions.

Meanwhile, the case which the EU brought over subsidies Boeing has received from state and federal governments in the US continues in parallel. While both cases were initially filed in October 2004, the Boeing case is now almost a year behind the Airbus one in the dispute settlement process. In March this year, the WTO ruled against the US government in the Boeing case, finding that the giant US airline manufacturer had received between US$5 billion and US$6 billion in illegal subsidies from the US government between 1989 and 2006, still much less than what European company Airbus received from EU member states (approximately US$18 billion). Washington has been given six months to comply with the WTO ruling.