Special relationship? U.S. threatens Britain with £6bn trade sanctions as legal battle over aircraft subsidies comes to a head



Britain could be hit with more than £6billion of trade sanctions from the U.S. in retaliation for actions also committed by Germany and France.

The drastic measures – which could cripple Britain’s export trade with America – are the climax of a mammoth eight-year legal battle between the EU and the U.S.

Both have taken legal action against each other over subsidies given to two major aircraft companies, Boeing and Airbus.

Long haul legal fight: Britain could be hit with more than £6billion of trade sanctions from the U.S. in retaliation for actions also committed by Germany and France. The U.S. hopes to pressure the EU into reversing its payments to Airbus

Both groups have been supported by billions of pounds of state-backed funding since they were created in order to help them develop new planes.

Germany, France and the UK have paid £11billion to Airbus in subsidies, it is alleged.

An eight-year legal battle has been fought at the World Trade Organisation over the legality of the payments.

Now America has asked for permission to slap billions of pounds of sanctions on exports coming from Europe – including British produce.

By doing so, the U.S. hopes to pressure the EU into reversing its payments to Airbus.

The U.S. today took a crucial next step towards imposing sanctions by demanding the creation of a panel to investigate whether the EU has obeyed the WTO’s ruling to stop paying subsidies.

If the EU has not, then America may be given permission to impose sanctions up to the value of £6.25billion.

But when choosing which products to tax, America will target those goods it thinks will do the most damage to our economies – meaning the entire burden could fall onto Britain’s exports.

The U.S. is accusing the EU – taken as a whole – of paying £11billion of subsidies to Airbus.

Boeing 747: The EU says Boeing received billions of pounds from the U.S. government for its planes in the form of loans that do not have to be repaid

European governments, including Germany, France and Britain, gave the company billions in ‘launch aid’ – covering its huge costs involved in getting new planes off the ground.

But the EU says Boeing received billions of pounds from the U.S. government for its planes in the form of loans that do not have to be repaid.

All of the money given to Airbus, European lawyers say, has to be repaid.

Both cases, which are being fought through the World Trade Organisation, have to go through the same lengthy legal processes.

But America’s case against Britain is currently four months further ahead – meaning U.S. sanctions against Britain will be the first to bite.

Because of the appeal process, which involves a panel of judges in the WTO, is so drawn-out, the earliest sanctions could be in place is early 2013.

But America’s intention to press sanctions has already been filed to the WTO.

Currently, the WTO is assessing whether the EU has halted its payments to Airbus.

But industry insiders say the futures of both companies – Airbus and Boeing – are conditional on state-backed funding.

It is inevitable, they say, that both the EU and the U.S. will be found guilty of the charges.