The U.S. has taken the next step in the long-running World Trade Organization (WTO) battle over subsidies for large commercial aircraft. The office of the U.S. Trade Representative says it is requesting that a compliance panel be established to address the European Union’s alleged non-compliance with the WTO’s findings in DS316, the U.S. case against the EU over subsidies to Airbus.

Late last year, the EU submitted its plan to remove Airbus subsidies deemed non-compliant. At the time, the U.S. signaled that it thought the plan insufficient. The U.S. and the EU earlier this year discussed the compliance plan, and the U.S. says the EU “was unable or unwilling to substantiate its claims to have addressed the WTO inconsistencies, and the consultations failed to resolve the dispute.”

The U.S. request for a compliance panel takes the dispute saga one step closer to the imposition of sanctions. However, both the U.S. and the EU have said a negotiated settlement is preferable. At any step in the process, the two sides could negotiate a settlement before sanctions are levied.

Furthermore, even if sanctions are imposed, there is no guarantee that they would be against Airbus or other aerospace imports, a WTO official says. The U.S. could opt to apply sanctions to any EU import. “The United States remains prepared to engage with the EU in any meaningful efforts that will lead to the goal of ending subsidized financing at the earliest possible date,” says U.S. Trade Representative Ron Kirk.

“We refuse to stand by while American businesses and workers are disadvantaged,” Kirk adds. “By taking this action today, we are reiterating the Obama administration’s commitment to ensuring that every one of our trading partners plays by the rules and that American companies can compete on a level playing field.”

-Madhu Unnikrishnan,