EU launches appeal after claiming WTO Boeing victory

BRUSSELS, April 2, 2011 (AFP) - The European Union launched Friday an appeal against a WTO ruling that the United States gave aircraft maker Boeing billions of dollars in illegal subsidies, after claiming victory in the dispute.

"The EU has chosen to quickly appeal technical elements of the ruling for legal strategic reasons," said John Clancy, spokesman for EU trade commissioner Karel De Gucht.

"The EU's victory in this case against Boeing remains very clear for all to see," he said, referring to the WTO finding that state aid provided by Washington reached at least $5.3 billion (3.75 billion euros).

Clancy said the speed of the EU appeal -- the latest tit-for-tat measure in a seven-year battle over state aid for rivals Airbus and Boeing -- was aimed at accelerating decisions in an earlier WTO finding against Europe.

A WTO ruling in June 2010 accepted three out of seven claims by Washington that Airbus effectively received illegal export subsidies. Both sides have appealed that ruling.

An EU source close to the negotiations warned that Brussels was anticipating "a much bigger appeal" from Washington on the Boeing case.

De Gucht said Thursday when the findings were released in Geneva that the EU was to "call on the US government to take the appropriate steps that may assist to achieve a mutually agreed solution to this dispute."

However, the US government and Boeing also claimed a moral victory, saying that the amount of illegal subsidies paid to the US aircraft maker was much less than that paid to European rival Airbus.

The appeal is expected to challenge WTO decisions about subsidies not classed as illegal, or where they were not deemed to have been commercially harmful.

Airbus, part of the European Aeronautics Defence and Space Company (EADS), has claimed that illicit US subsidies caused $45 billion of lost civil airliner sales between 2001 and 2006.

Brussels can also be expected to argue that the WTO should re-assess certain research and development subsidies that it judged to have had benign effects on Airbus' business.

Within a 900-page set of findings, for instance, the WTO said tax breaks amounting to around half a billion dollars given by the states of Illinois and Kansas to Boeing did not cause harm to the EU.

Boeing for its part claimed that Thursday's ruling "rejects 80 percent of the EU's claims against the US, finding no more than $2.7 billion of impermissible subsidies to Boeing not previously remedied."

The US calculations did not include a substantial chunk of federal tax breaks, which Boeing said were no longer relevant because that particular programme had been scrapped.

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