EU accuses U.S. of overestimating Airbus aid at subsidies hearing

GENEVA — The United States submitted a weak defense of the billions of dollars it pays in subsidies to Boeing, the European Union said Tuesday as the U.S. and EU began World Trade Organization hearings over their rival claims of illegal financing for airplane makers.

Brussels also rejected as "absurd" a $205 billion evaluation by the U.S. of the benefit France-based Airbus has received as a result of European government support. The U.S. accuses the company of receiving billions in so-called launch aid from the bloc and its member states, which would have amounted to much higher costs if the loans were given at commercial rates.

"This 'estimate' is completely unrealistic," the 27-nation EU said in a statement, adding that the $205 billion figure is more than 12 times the total net assets of Airbus' parent company European Aeronautic Defence and Space (EADS).

"If the U.S. methodology were to be applied to the massive federal, state and local subsidies benefiting Boeing, the amount challenged by the EU would be not $23 billion, but rather $305 billion," the EU said.

The trans-Atlantic dispute, expected to be the most complicated and costly in the Geneva-based WTO's 12-year-history, depends on the ability of Washington, D.C., and Brussels to show that the alleged subsidies have caused their industries harm. Both have presented evidence of lost plane sales or lowered prices to back up their claims.

The EU cites tax breaks, development funding and outright grants to Boeing as examples of wrongdoing by the U.S. and specific American states. It accuses the U.S. of providing vast amounts of hidden support to Boeing through military contracts.

The U.S. declined to immediately comment. It has refused to make public its WTO submission, saying it still needs to remove any confidential business information it may include.

The dispute began three years ago when the U.S. pulled out of a 1992 agreement with Brussels on plane subsidies. The WTO is due to issue its first report in the U.S. case against Airbus in December, and the EU case against Boeing in June 2008.