U.S. nears sanctions phase in Airbus trade spat

, Thu Mar 29, 2012 – The United States is expected to ratchet up pressure on the European Union to end subsidies for Airbus by moving at the World Trade Organization toward retaliation on European goods, an industry official and other sources said.

“I’m hearing that the USTR will take the next step soon,” an industry official said, referring to the WTO process for obtaining permission to retaliate, referring to the office of the U.S. Trade Representative.

An EU plan in December for ending subsidies declared illegal by the WTO had failed to satisfy either Boeing or the U.S. government, the official and other sources said.

The next step in the process is for the United States to ask the WTO for a “compliance panel” to assess whether European governments had ended their illegal subsidies.

That could lead to U.S. sanctions on exports from Britain, France, Germany, Spain and potentially other European nations if the WTO panel agrees the steps taken to end Airbus subsidies have been inadequate.

Washington has already said it could seek as much $7 billion to $10 billion in sanctions. The process of obtaining WTO permission could take 6 months to a year and the amount approved could be less than requested.

Many analysts expect the two sides to reach a negotiated settlement before any sanctions are imposed.