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US threatens sanctions against European Union after trade body rules Boeing harmed by Airbus aid

Hannah Boland
Airbus chief executive Tom Enders said the report was really only half the story - AFP

The US has threatened to impose billions of dollars worth of retaliatory sanctions against the European Union, after the World Trade Organisation ruled the trading bloc had been providing illegal aid to Airbus.

The WTO dismissed an appeal by the European Union over an earlier ruling, saying it had failed to remove unfair funding for two of Airbus's models. 

Boeing had been arguing that European plane maker Airbus received $22bn (£16.2bn) in market distorting preferential government loans to help launch the A380 superjumbo and A350 jet. 

Boeing chief executive Dennis Muilenburg said: “Today’s final ruling sends a clear message: disregard for the rules and illegal subsidies are not tolerated.

"The commercial success of products and services should be driven by their merits and not by market-distorting actions."

Airbus Boeing feud

The ruling marks a significant victory for Washington, bringing to a close a case dating back to 2004, and is the first of two key decisions to be made by the WTO regarding the ongoing dispute between Airbus and Boeing.

The second ruling, expected later this year, relates to a separate case, in which the EU is challenging US aid to Boeing. This could lead to the EU later imposing its own punitive tariffs against the US. 

Airbus chief executive Tom Enders said the report was "really only half the story… The other half coming out later this year will rule strongly on Boeing’s subsidies and we’ll see then where the balance lies.”

The WTO's findings mark a stepping up of trade tensions between the US and European Union, which are already wrangling over whether US tariffs on aluminium and steel will apply to European products. 

Speaking after the ruling, US trade representative Robert Lighthizer said: "It is long past time for the EU to end these subsidies.

"Unless the EU finally takes action to stop breaking the rules and harming US interests, the United States will have to move forward with countermeasures on EU products."

The EU's trade commissioner Cecilia Malmstrom said the WTO had agreed that the EU had "largely complied" with its original findings, but that the EU would also "now take swift action to ensure it is fully in line with the WTO's final decision in this case".