Airbus offers subsidy concession to end U.S. tariffs

Europe’s Airbus said on Friday it was amending French and Spanish government loans in a “final” bid to reverse U.S. tariffs and jog the United States into settling a 16-year-old dispute over billions of dollars of aircraft subsidies.

The plane maker said it had agreed to pay higher interest rates on two loans that it received to help develop its A350jet, which entered service in 2015.

The European Union and France said the move to accept higher interest rates should settle the row with the United States at the World Trade Organization. The EU said it would retaliate with sanctions should that not happen.

“In the absence of a settlement, the EU will be ready to fully avail itself of its own sanction rights,” Trade Commissioner Phil Hogan said.

The loans are part of a system targeted by the United States in the world’s largest corporate trade dispute, which has also involved European condemnation of U.S. support for Boeing.

Failure to withdraw Airbus subsidies completely led to WTO approval for U.S. sanctions last year on up to $7.5 billion of European goods ranging from wine to whisky.

Trade groups are bracing for an escalation of the row in the autumn when the EU is expected to win WTO approval to hit back with its own tariffs on U.S. goods over subsidies for Boeing.

The WTO has faulted both Europe and the United States for doling out illegal support to their respective jetmakers. For the last eight years, the argument has been mainly about whether each side obeyed those rulings amid multiple appeals.

“With this final move, Airbus considers itself in complete compliance with all WTO rulings,” Airbus said.

In May, the United States declared itself in full compliance with WTO findings after Washington state abolished aerospace industry tax breaks that largely benefited Boeing.