* Trade body issues confidential appeal verdict
* Ruling concerns subsidies for Boeing composite jet
* World’s largest trade dispute continues
* Boeing says EU should withdraw subsidies to Airbus
By Sebastian Moffett
BRUSSELS, Feb 29 (Reuters) - The World Trade Organization (WTO) issued confidential findings on Wednesday in one of the world’s largest trade disputes, in which the European Union accuses Boeing Co of having benefited from $5.3 billion subsidies from U.S. authorities.
The Geneva-based trade watchdog delivered its verdict on an appeal by the United States against a WTO ruling in March 2011 that Boeing had received multi-billion-dollar U.S. subsidies. The report is not expected to be made public for several weeks, although extracts of such findings sometimes leak out beforehand.
“The Appellate Body has issued its report to the parties (the EU and the United States) to the dispute,” EU Trade Spokesman John Clancy said in a statement. “Today’s ruling, when it is made public, will provide us with a clear picture of where the two parties stand in the aircraft disputes.”
The WTO issued its findings at 1100 GMT on Wednesday, Clancy said.
Last March’s ruling came after a separate panel of WTO experts had found that Boeing’s European rival Airbus, owned by EADS, had benefited from billions of dollars of subsidies through favourable loans by European governments.
The two cases have made for an epic contest between the world’s dominant planemakers, which has dragged on for more than seven years, generating thousands of pages of reports and costing $100 million or more in legal bills. Both sides have claimed victory each step of the way.
“Only negotiations at the highest political level can lead to a real solution and we hope that today’s report provides momentum in that direction,” said Clancy. “The real challenge remains to find a mutually acceptable approach to maintain a healthy and viable aircraft industry producing safe and more environmentally friendly aircrafts.”
“The only way this can be resolved is a permanent agreement between all the parties concerned,” said UK-based aerospace and defence consultant Howard Wheeldon. “There is no sign of this happening yet.”
The United States says the WTO has already put its finger on $18 billion in illegal subsidies paid to Airbus in that earlier case, and wants to impose annual sanctions of between $7 billion and $10 billion before any results of this latest appeal are considered.
The European Union wants to open the door to negotiations - but only if the U.S. drops its condition that Airbus should axe subsidies first.
While disputing the $18 billion figure, the EU says it has complied with the earlier ruling, but Washington denies this.
The sides continued to spar on the eve of the WTO ruling.
“We Europeans have had a clear position since 2003: Talks anytime, anywhere, about anything without preconditions,” said Airbus spokeswoman Maggie Bergsma.
At Boeing, spokesman Charlie Miller said: “It is not a question of negotiation, it is a question of compliance.”
Most trade analysts say the twin cases are likely to drag on for years before either sanctions actually take effect or the two sides try to negotiate a deal to stop the trade war escalating.
Unions on both sides of the Atlantic are concerned over the potential impact on jobs.
Star exhibit in Wednesday’s case is Boeing’s 787 Dreamliner, the world’s first mostly plastic-composite passenger plane.
Airbus argues Boeing got a jump-start on composite design by taking part in government research and could thus build the revolutionary 787 earlier than it could have done alone.
It also says the 787’s aerodynamic design owes a debt to arms projects like the F-22 combat jet and that working for U.S. space agency NASA taught Boeing how to cut noise and maintenance costs.
Europeans say the lift from R&D projects translated into savings that allowed Boeing to slash prices across its product line, underpinning their price war between 2004 and 2006.
Boeing argues, however, it had taken advantage of greater access to technology after broadening its supply chain and that the results of government-funded research merely went into the pool of publicly available science.
Boeing says the 787 was deliberately designed as “ITAR-free” -- meaning it is not subject to U.S. restrictions on export of sensitive technology -- so it could not have benefited from the list of U.S.-funded military airplane projects cited by the EU.
Boeing admits dropping prices in 2005 and 2006, but says it was forced to do so to respond to aggressive pricing from Airbus, which Boeing blames on unfair European subsidies.
The United States was hoping that Wednesday’s appeal verdict would eliminate a previous WTO finding that NASA paid $2.6 billion in illegal aid.
The EU wanted the verdict to strengthen a finding that Boeing got $476 million of aid from Kansas without directly harming Airbus. The Kansas payments have come under the spotlight after Boeing decided last month to shut down a Wichita plant employing 2,160 workers, sparking protests from local politicians.