Airbus Got $100 Bln in Illegal Subsidies Says US

GENEVA (Reuters) - Europe's Airbus EADS.PA became the world's leading planemaker thanks to over $100 billion in illegal state aid, the United States has alleged in testimony to the World Trade Organization (WTO) in its trade row with Europe over alleged aircraft industry subsidies.

In its submission to the WTO panel, also released on Wednesday, the European Union accuses Washington of trying to "rewrite history" by ignoring a bilateral deal they had covering government support.

"European governments are not the Salvation Army: they lend money in the public interest, subject to close scrutiny and seek to secure an adequate return," the EU maintained.

The case before the WTO panel covers assistance given to Airbus by its European host nations, which Washington contends broke trade rules. The EU has hit back with a similar case of its own against alleged hidden U.S. subsidies which it says were enjoyed by Airbus's rival Boeing (BA.N).

Together the charges amount to the biggest case ever to come before the global trade arbitrator since its creation in 1995.

Washington says aid has let Airbus take decisions on whether to bring hugely expensive new planes to market without having to worry too much about failure.

"Launch aid has enabled Airbus to launch a series of large civil aviation (LCA) models at a scale and pace that would have been impossible without subsidies," it said in its 72 pages of testimony at the WTO.

The hearings, the first of several set for the case, mark only the second time that any litigant has gone public with their arguments in the normally secretive workings of the WTO's dispute settlement procedures.

No ruling in the case against Airbus is expected before September, while a verdict in the other half of the tit-for-tat wrangle will only come in early 2008.