published May 28, 2018 1:17:29 PM, by Bryce Baschuk and Benjamin Katz
(Bloomberg) —

The U.S. has signaled a willingness to begin talks with the European Union to try to reach a settlement over illegal state subsidies handed to Airbus SE, potentially averting billions of dollars in sanctions against the trade bloc, according to a person familiar with the matter.

At a meeting Monday of the World Trade Organization’s dispute-settlement body, the U.S. said it will still pursue penalties if an agreement can’t be reached, said the person, who attended the meeting and asked not to be named because the discussions aren’t public.

The proposed talks indicate a possible shift in the position of the Office of the U.S. Trade Representative, which negotiates trade agreements and has threatened to impose retaliatory tariffs against EU products following a final WTO decision in May on aid that Airbus has received. That process, in which the WTO would determine the scale of any sanctions, was expected to kick off at the meeting on Monday.

A spokesman for the WTO declined to comment. A spokeswoman for Airbus said the European planemaker would “welcome” a proposal from the U.S. to discuss a settlement without any preconditions.

Superjumbo Model

A spokesman for Boeing Co., which competes with Airbus, referred questions to the U.S. Trade Representative, which didn’t immediately respond to a request for comment on Monday, a public holiday in the country. Boeing has said previously that Airbus aid has harmed the company and would “translate into billions of dollars in tariffs on European exports to the U.S. annually.”

Airbus has called repeatedly for the opposing sides to reach a settlement after the WTO, the arbiter of international trade disputes, determined that the Toulouse, France-based planemaker had failed to sufficiently reverse subsidies from EU countries for its two biggest models, the A380 superjumbo and the A350. The manufacturer said last week that it reached a deal with its state backers to adjust existing loans in line with the trade body’s findings.

The WTO is separately due to rule on an EU counter-claim against Boeing Co. that the U.S. competitor had failed to adequately amend subsidies for its 777 and 787 wide-bodies. Airbus had been relying on the outcome of that decision, due later this year, to persuade its Chicago-based rival to enter settlement talks.

To contact the reporters on this story: Bryce Baschuk in Geneva at bbaschuk2@bloomberg.net ;Benjamin Katz in London at bkatz38@bloomberg.net To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net Tara Patel, Tom Lavell

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