On Tuesday, the WTO ruled as the European Union had ignored the requests of halting all subsidies to the plane maker Airbus which has prompted United States to threaten sanctions against the European products. Unless the EU stops “harming U.S. interests”, this sanction will not be removed.
The WTO said that the EU had failed to remove the support in the form of preferential government loans for the world’s largest airliner, the A380, and Europe’s newest long-haul plane, the A350, causing losses for Boeing and U.S. aerospace workers.
The Geneva watchdog, however, had dismissed U.S. claims that the loans for the most popular models of Airbus, the A320 and A330, were costing aignisignif sales to Boeing. In that process, it has narrowed the scope of one of the world’s longest and costliest trade spats.
The shares of Airbus had fallen shortly after the WTO issued its findings and were poised to close down around 0.86 percent.
The report comes at a time of mounting trade tensions over U.S. aluminum and steel tariffs and the impact on European firms of Washington’s decision to exit the Iran nuclear pact.
U.S. Trade Representative Robert Lighthizer said in a statement the United States would slap countermeasures on European goods unless the EU fell into line.
It has been predicted that the tarrifa of Boeing could reach billions of dollars a year starting as early as 2019.
It said in a statement that, “This is expected to be the largest-ever WTO authorization of retaliatory tariffs.”
The EU’s Executive Commission said most of the aid faulted in earlier rounds of the long-running case had expired in 2011 and that it would swiftly comply on the remaining measures.
The findings of Tuesday wrapped up a case against the European Union dating back to 2004 and means that the U.S. can now seek WTO backing to impose sanctions on an as yet unspecified list of European goods.
At the same time, the WTO is close to finalizing a similarly drawn-out case against subsidies for Boeing, and Airbus says this could in turn spark EU sanctions against the United States.
The CEO of Airbus, Tom Enders said, “Today’s report is really only half the story.”
Both sides are expected to push for billions of dollars in sanctions annually by barring a negotiation deal.
However, the amounts will depend on arbitration, expected to take around a year.