Corrected: EU files tactical appeal in Boeing trade spat

Markets Reuters

Corrects last paragraph. More than one percent, not more than a tenth

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By Tim Hepher and Juliane von Reppert-Bismarck

GENEVA/BRUSSELS (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 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.

Washington has also claimed victory in the verdict by comparing it to recent WTO condemnation of what the U.S. says are even larger European subsidies to Airbus.

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

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Appeals by both sides are common in the WTO system, but players often wait until the last available opportunity to do so. Sources familiar with the matter said the EU's appeal the latest 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 5 days.

"It is pure tactics," said a source close to the case.

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.

DIPLOMATIC DANCE

Like most diplomatic dance steps in a city hosting over 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 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 just one side alone -- more than one percent of the subsidies identified in the most recent finding.

(Additional reporting, Robin Bleeker; Editing by Andrew Callus)