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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 Organisation ruling to stop subsidies to planemaker Boeing Co 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. aircraft manufacturer 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 and that recent U.S.-EU talks had failed to resolve the dispute.

"The U.S. claimed to have removed (the subsidies), but provided no detailed evidence to support its claims," it said.

Nkenge Harmon, a spokeswoman for the U.S. Trade Representative's office, said the United States remained "confident that the actions we announced on Sept 23rd brought us into full compliance with our WTO obligations."

The EU's request for a panel to review the U.S. compliance effort seems to ignore U.S. programs "that we made clear have been terminated," she said.

The WTO has also ruled against European support to Airbus in a case brought by the United States. Washington accuses the EU of not complying with that ruling.

Airbus is owned by EADS , in which the French government has a stake and the German government has influence via a holding owned by Daimler AG .

"Instead of bringing into compliance the massive illegal subsidies that Boeing has received in the past and continues to receive from U.S. federal and state governments ... Boeing has neither paid back nor eliminated the illegal subsidies," said a spokeswoman for Airbus.

Washington is threatening up to $10 billion in sanctions in the dispute, while Brussels is threatening $12 billion.

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

(Reporting by Robin Emmott; Editing by Kevin Liffey and Eric Walsh)

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