WTO To Arbitrate On US Sanctions In Airbus Case

December 22, 2011

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The WTO launched an arbitration process on Thursday to examine a US claim for up to USD$10 billion of sanctions against the European Union in a dispute over subsidies for Airbus planes.

The arbitration process is the latest step in the world's biggest trade dispute, which has dissolved into an increasingly complex legal battle between the United States and the EU on behalf of aircraft giants Boeing and Airbus.

Although the arbitration process has been triggered, nothing may happen until the two sides have exhausted other legal avenues.

Many trade experts expect the two sides, which each accuse the other of unfairly supporting its own plane maker, to attempt to negotiate a settlement as the legal appeals and counter-appeals become more and more entangled.

In the latest round of the dispute, the WTO told the EU to stop all illegal subsidies for Airbus by December 1. The EU claimed to have done so but the United States said it had not.

The US side said on December 9 that it wanted to impose sanctions of USD$7 billion - USD$10 billion annually on the EU, a sum it said represented the value of lost exports of US large civil aircraft because of illegal EU subsidies for Airbus.

The EU then challenged both the level and calculation of the sanctions, triggering the arbitration process.