Europe accuses U.S. of failing to cut Boeing aid

BRUSSELS (Reuters) – The European Union accused the United States on Thursday of ignoring a World Trade Organization ruling to stop subsidies to planemaker Boeing (BA.N ) and asked the Geneva-based body to investigate, prolonging the world’s largest trade dispute.

The United States said last month it had complied with an order to withdraw subsidies to Boeing after the WTO found in March that the U.S. planemaker had received billions of dollars in unfair aid.

But the European Commission, the EU’s executive, said Washington has shown no proof it has complied.

“It is now clear for the European Union that the United States has not only failed to properly implement the decision of the WTO but it has even provided new subsidies to Boeing,” the Commission said in a statement.

The Commission said U.S. subsidies were costing European aerospace companies billions of euros in lost revenue. Recent U.S.-EU talks failed to resolve this dispute, the Commission said.

“The US claimed to have removed (the subsidies), but provided no detailed evidence to support its claims,” it said.

The U.S. Trade Representative’s office said it had met a deadline to comply with the WTO’s findings in a case brought by the European Union. That was in response to the first claim launched by the United States more than seven years ago.

Brussels says Boeing is unfairly assisted by government research deals and other federal and local measures.

The WTO has also ruled against European support to Airbus, which is owned by EADS (EAD.PA ), in which the French government has a stake and the German government has influence via a holding owned by Daimler (DAIGn.DE ).

In the row, the United States and the European Union disagree over the ruling against subsidies to Airbus, which the United States says far outstrip any U.S. government support for Boeing.

The United States has also accused the European Union of ignoring WTO decisions and is threatening up to $10 billion in sanctions.

However, most observers expect both sides to eventually negotiate a settlement to end the row.

(Reporting by Robin Emmott- editing by John O’Donnell)