EU, U.S. plane subsidy dogfight continues

   Countering U.S. claims, a review of U.S. efforts to comply with a World Trade Organization ruling on illegal subsidies in the so-called “Boeing case” by the European Union found the United States has not lived up to its obligations, the European Commission said Tuesday.
   The commission has therefore decided to challenge the alleged U.S. non-compliance in the WTO.
   On Sept. 24, the European Union received the compliance notice from the United States in the WTO Dispute Settlement case 353.
   “The EU reviewed the measures presented by the U.S. to assess if these were sufficient to comply with WTO rules, as the U.S. claimed,” the European Commission said. “The lack of information in the U.S. notification unfortunately facilitated a quick review which suggests that the U.S. has neither withdrawn the illegal subsidies granted to Boeing, nor removed their adverse effects. The EU even has indications that the U.S. could have actually granted more illegal subsidies to Boeing in the meantime.”
   The European Commission said it has no other choice but to challenge the U.S. government’s compliance claim.
   “We are confident that this process will finally lead to a level playing field in the aircraft sector,” said EU Trade Commissioner Karel De Gucht in a statement.
   In March 2012, the WTO’s Appellate Body rejected the U.S. appeal and found that U.S. federal and state governments granted between $5 billion and 6 billion in subsidies to Boeing between 1989 and 2006. Subsidies to be granted after this date are estimated to be at least $3.1 billion. The Appellate Body went further than the previous WTO panel ruling in supporting the European Union’s claims, notably by finding the subsidies granted by the city of Wichita, Kan., also flout WTO rules.
   The Appellate Body expanded the findings against the United States by determining that $476 million subsidies granted by the city of Wichita are causing adverse effects.
   On March 23, the WTO’s Dispute Settlement Body adopted the Appellate Body report, giving six months to the United States to either withdraw these illegal subsidies or remove their adverse effects, in line with WTO law provisions, and notably the Subsidies and Countervailing Measures agreement.
   Under a procedural “sequencing agreement” concluded between the European Union and the United States, the parties have 15 days to enter into consultations to resolve any disagreement. Thereafter, the European Union has the right to establish a panel to review the issue of U.S. compliance.