GENEVA: The European Union (EU) launched a trade dispute at the World Trade Organisation (WTO) on Friday to challenge what it considers illegal US subsidies for Boeing Co and other aerospace manufacturers in the US state of Washington.

The EU case argues that the Pacific coast state broke WTO rules by offering Boeing “vastly expanded” tax breaks to manufacture its new 777X model there.

The EU and the United States have still not resolved two parallel clashes about subsidies for Boeing and its European rival Airbus, the two biggest and longest-running disputes in the WTO’s history.

In a 10-year legal fight, both sides have been faulted over their support for their large civil aircraft makers, but the legal wrangling continues over how much damage each has done to the other.

In its new complaint, the EU said the WTO ruled in 2012 that Washington state’s subsidies for Boeing and other aerospace firms that run until 2024 were illegal, and it was now challenging the extension of those subsidies until 2040.

The EU said the extended subsidies were illegal because they required the beneficiary to use local rather than imported inputs — thereby discriminating against non-US suppliers.

“The subsidies scheme extension is estimated to be worth $8.7 billion and will be the largest subsidy for the civil aerospace industry in US history,” the EU said in a statement.

The state said on Friday that the credits were available to all commercial aerospace producers and in 2013, 460 firms claimed incentives under at least one of the programmes. That number includes “many European-owned aerospace suppliers,” said Alex Pietsch, director of the state office of aerospace.

Under WTO rules, the US has 60 days to try to deal with the EU’s concerns in bilateral talks. After that period, the EU could ask the WTO to set up a panel of three adjudicators to rule on its complaint.

That would probably take until 2016 at least, although the WTO’s dispute system is already congested, and any judgment could be followed by an appeal.

Published in Dawn, December 20th, 2014