PARIS — The European Union inched closer to a trans-Atlantic trade war Thursday, saying that it would seek to impose up to $12 billion a year in sanctions against the United States in retaliation for U.S. government subsidies to Boeing.
The European Commission, the EU executive body, said it was seeking the sanctions to compensate for the impact of illegal subsidies to Boeing that it said gave Boeing an unfair advantage over its European archrival, Airbus. The move, which follows a similar trade threat against Europe made by Washington this year, is the latest salvo in a seven-year battle over aircraft subsidies.
A World Trade Organization appellate body affirmed in March that Boeing had received at least $5 billion in improper subsidies from the U.S. government to develop the 787 Dreamliner and other aircraft. But in a separate case, the organization found that Airbus had benefited from four decades of improper subsidies from European governments. The WTO ordered both sides to end the subsidies.
In a statement, the European Commission said it had decided to ask the WTO for permission to impose trade sanctions after reviewing a list of remedies submitted this week by the U.S. trade representative — remedies the commission said were insufficient.
The commission said it had acted because “the United States had not lived up to its obligation to remove its illegal subsidies in the aircraft sector, as required by the WTO rulings that clearly condemned U.S. subsidies to Boeing."
In a statement, the WTO said the European request was expected to be formally submitted at a meeting of the organization’s dispute settlement body Oct. 23.
The WTO has also concluded that Airbus, a unit of European Aeronautic Defense & Space, received $15 billion in loans from European governments at below-market interest rates, as well as several billion dollars in grants to build the A380 superjumbo and five other best-selling models.
The trade panel did not quantify the savings from the lower interest rates but said that without the loans, Airbus could not have introduced many of its models when it did.
In April, Washington rejected the European Union’s list of remedies to eliminate the subsidies to Airbus that the WTO had deemed illegal. The U.S. government said it would seek the trade body’s approval to impose $7 billion to $10 billion in retaliatory measures. A WTO panel was expected to rule on that request around the end of this year.
On Sunday, the Office of the U.S. Trade Representative said Washington had eliminated certain payments that Boeing had been receiving from the Defense Department and NASA. A number of tax breaks and beneficial funding programs to Boeing had also been removed, the trade representative said. The European Commission said Tuesday, however, that these steps did not fully offset the adverse trade effects to Airbus.
Charlie Miller, a Boeing spokesman, said he was not surprised by the union’s move but declined to offer further comment.