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EU widens aircraft dispute with Boeing alleging new subsidy claim

THE European Union has launched a new complaint at the World Trade Organization alleging illegal tax breaks in Boeing's home state of Washington, accusing the state of breaking global trade rules by offering tax incentives to persuade the company to manufacture the new 777X model there.

The latest complaint has escalated the decade-old dispute over aircraft subsidies.

The EU and United States have yet to resolve two parallel clashes involving mutual accusations of illegal subsidies for Boeing and its European rival Airbus, collectively the biggest and longest-running dispute in the WTO's history, according to Reuters.

The US Trade Representative's office (USTR) said the claims "lack any foundation" and showed the EU did not really want a constructive solution, while a Boeing spokesman said they were a diversion from "massive amounts of illegal launch aid" paid to Airbus.

The latest manoeuvres could deepen the bitter industrial contest as the 406-seat Boeing 777X, an expanded version of its profitable 777, competes with Europe's upcoming A350-1000.

In its new complaint, the EU said the WTO had ruled in 2012 that Washington state's support for Boeing and other aerospace firms until 2024 was illegal, and it was now challenging the extension of these alleged subsidies until 2040.

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

Washington state lawmakers extended the tax breaks during a brief special session in November 2013 after Boeing said the credits were necessary for the company to produce the 777X in the state.

Under WTO rules, the US has 60 days to try to deal with the EU's concerns in bilateral talks. After that, the EU could ask the WTO to set up an adjudication panel.