US Threat Of Airbus Sanctions Excessive - France

December 12, 2011

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A US move to ask the WTO for permission to impose trade sanctions on Airbus, after rejecting a European Union plan to eliminate subsidies, is "excessive and premature", France's trade minister said.

The US said on Friday it would ask the WTO to impose sanctions that could total USD$7 billion to USD$10 billion annually, marking a low point in the world's biggest trade dispute.

"This reaction is excessive and premature," a statement from trade minister Pierre Lellouche's office said. "In any case, the US can neither determine unilaterally if the European Union has put into action the conclusions of the Airbus (compliance) panel, nor is it allowed by the WTO to impose sanctions."

An end to the battle over aircraft subsidies could be some way off and a negotiated settlement may be the most likely outcome.

The EU has its own case against US support for Boeing, and resolving that will be part of the final mix.

But US officials exploited a tactical advantage derived from the fact the WTO has already issued a final ruling in the US case against Airbus subsidies, while the EU case against Boeing subsidies is pending.

"We are very confident with regard to the outcome of this (EU) case... for which the conclusions should be released soon," Lellouche said.

The transatlantic aircraft dispute is the world's largest trade fight, affecting more than 100,000 jobs in a market worth more than USD$2 trillion.

In early December, the EU presented a plan to comply with a WTO appellate body ruling against European government support for Airbus in a case brought by Washington in 2004.