EU Wants $12B Annual Trade Sanction On US In Boeing Spat

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(Reuters) - The European Union asked the World Trade Organization on Thursday for the right to impose annual trade sanctions worth up to $12 billion on the United States in retaliation for illegal subsidies to plane maker Boeing (BA.N).

The request is the latest legal move in the world's biggest trade dispute, over subsidies for Boeing and its European rival Airbus (EAD.PA), which has lasted more than seven years so far.

"This follows the EU's assessment that the United States had not lived up to its obligation to remove its illegal subsidies in the aircraft sector, as required by the WTO rulings that clearly condemned U.S. subsidies to Boeing," the EU said in a statement.

The figure of $12 billion was "based on estimates of the damages suffered by the EU due to unfair and biased competition from the U.S. industry," it said.

In parallel legal disputes, the WTO has ruled that both firms have received billions of dollars in illegal subsidies to support their large civil aircraft programs.

In Boeing's case, the deadline for the United States to comply with the WTO ruling was last Sunday. The EU has rejected its claim to have done so.

The European demand for sanctions mirrors a U.S. claim to the right to impose up to $10 billion of sanctions on the EU.

Both claims are effectively frozen until other legal avenues have been exhausted, and many experts expect the two sides will settle the dispute outside the courtroom rather than let the tit-for-tat litigation drag on for years longer.

There was no immediate reaction to the European move from the U.S. Trade Representative's office.

However, U.S. Ambassador to the WTO Michael Punke, speaking to reporters in Geneva on Wednesday, said the EU was much more at fault than the United States.

"Here is the key figure to keep in mind, for those who are keeping score at home on the Boeing-Airbus discussion: Through the WTO dispute resolution process, there have been identified $19 billion of illegal financing by Airbus. The equivalent number that's been identified for Boeing is $3 billion to $4 billion. So that's the starting point for our discussion," Punke said.

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