UPDATE 4-EU files tactical appeal in Boeing trade spat

* EU seen bidding to narrow gap between rival subsidy cases

* Tactical move puts pressure on U.S. to speed up next move

* Wooden letterbox marks latest stage in epic trade fight
(Updates with additional USTR comment)

By Tim Hepher and Juliane von Reppert-Bismarck

GENEVA/BRUSSELS, April 1 (Reuters) – The European Union
filed an appeal against an aircraft subsidies ruling on Friday
just hours after calling it a victory, a tactical move in a
transatlantic game of global trade chess.

Europe’s appeal came after the World Trade Organization
ruled Boeing (BA.N: Quote, Profile, Research) had received at least $5.3 billion in
subsidies that were against the WTO rules, hailed as a
“crystal-clear” win by the European Commission.
[ID:nLDE72U108]

Washington has also claimed victory in the verdict by
comparing it to recent WTO condemnation of what the United
States says are even larger European subsidies to Airbus
(EAD.PA: Quote, Profile, Research).

Together the cases represent the world’s largest trade
dispute.

The case against EU aid to Airbus — lodged by the United
States — is several months ahead of the case against U.S. aid
to Boeing, raising European fears that Airbus could eventually
have to stop receiving disputed aid months before its U.S.
rival. The EU’s appeal was made quickly in order to close that
gap.

Both sides have 30 days to appeal, but once one side
appeals, the other must decide whether to respond in five
days.

“The EU’s victory in this case against Boeing remains very
clear for all to see. However, the EU has chosen to quickly
appeal technical elements of the ruling for legal strategic
reasons — including to reduce what has been a growing time gap
between the two parallel aircraft disputes,” said John Clancy,
EU trade spokesman.

A spokeswoman for the U.S. Trade Representative Ron Kirk
accused the EU of dragging out the dispute instead of moving to
comply with a separate WTO ruling that found Airbus had
received some $20 billion in subsidies. [ID:nWBT014424]

“We believe the panel’s findings challenged by the EU are
correct and that the Appellate Body will affirm them. The
Europeans haven’t gotten the message. Instead of prolonging the
dispute at the WTO, they should be figuring out how to comply
with the findings against them,” spokeswoman Nefeterius
McPherson said.

The United States says Thursday’s decision found only $2.7
billion in subsidies for Boeing that it still has to remove
because it has already eliminated some of its support.

To see what happens next over the $2 trillion plane market
and 100,000 affected jobs, all eyes are on a wooden letterbox.

A modern trade war is waged with a combination of
electronic communications, light footwork and almost balletic
stagecraft on the shores of Lake Geneva, home to the 153-nation
WTO.

To start the clock on possible sanctions or appeals,
delegates step across a path from the WTO’s marbled
headquarters lined with murals and slip a note into an A4-sized
pigeon-hole.

DIPLOMATIC DANCE

Like most diplomatic dance steps in a city hosting more
than 20 international organizations, even the most apparently
trivial move, like the timing of Friday’s EU appeal, is quickly
scanned for anything political.

By narrowing the nine-month gap between the two competing
cases, the EU may reduce the vulnerable period during which the
nerve of member states could wobble once the WTO gives its
verdict on appeals in the case against Airbus next month.

Washington has already said Airbus must rapidly repay or
restructure disputed European loans after that verdict.

In the case the EU is appealing on Friday, the United
States could now respond with its own early appeal, or try to
slow proceedings down by calling for a WTO hearing to discuss
technical matters such as how to handle confidential data.

The dispute over aircraft subsidies is the largest case
ever handled by the WTO, set up in 1995 to police global
trade.

Rulings on the case run to 2,000 pages. If allowed to run
their course, the mutual subsidy complaints could trigger
sanctions and a possible trade war, but most analysts say that
point is years off and may be prevented through negotiation.

“The reality is that … settlement of this dispute could
yet be years off,” said aviation expert Howard Wheeldon, senior
strategist at BGC Partners in London.

The case has kept dozens of lawyers, diplomats, lobbyists
and trade delegates active for six years, not only from the
United States and Europe but other countries indirectly
affected like Australia, China, Brazil, Canada, Japan and South
Korea.

One source involved in the case estimated the total cost of
the proceedings so far at tens of millions of dollars, reaching
possibly $60 million for one side alone — more than 1 percent
of the subsidies identified in the most recent finding.
(Additional reporting by Robin Bleeker, Doug Palmer in
Washington; editing by Andrew Callus and Mohammad Zargham)

UPDATE 4-EU files tactical appeal in Boeing trade spat