UPDATE 3-Europe accuses U.S. of failing to cut Boeing aid


* U.S. said in September it had removed subsidies to Boeing

* EU says Boeing still unfairly assisted by U.S. government

* WTO says Airbus also subsidized; both sides threatensanctions

(Adds U.S. reaction, paragraphs 7-9,)

BRUSSELS, Oct 11 (Reuters) - The European Union accused theUnited States on Thursday of ignoring a World Trade Organisationruling to stop subsidies to planemaker Boeing Co andasked the Geneva-based body to investigate, prolonging theworld's largest trade dispute.

The United States said last month it had complied with anorder to withdraw subsidies to Boeing after the WTO found inMarch that the U.S. aircraft manufacturer had received billionsof dollars in unfair aid.

But the European Commission, the EU's executive, saidWashington has shown no proof it has complied.

"It is now clear for the European Union that the UnitedStates has not only failed to properly implement the decision ofthe WTO but it has even provided new subsidies to Boeing," theCommission said in a statement.

The Commission said U.S. subsidies were costing Europeanaerospace companies billions of euros in lost revenue and thatrecent U.S.-EU talks had failed to resolve the dispute.

"The U.S. claimed to have removed (the subsidies), butprovided no detailed evidence to support its claims," it said.

Nkenge Harmon, a spokeswoman for the U.S. TradeRepresentative's office, said the United States remained"confident that the actions we announced on Sept 23rd brought usinto full compliance with our WTO obligations."

The EU's request for a panel to review the U.S. complianceeffort seems to ignore U.S. programs "that we made clear havebeen terminated," she said.

The WTO has also ruled against European support to Airbus ina case brought by the United States. Washington accuses the EUof not complying with that ruling.

Airbus is owned by EADS , in which the Frenchgovernment has a stake and the German government has influencevia a holding owned by Daimler AG .

"Instead of bringing into compliance the massive illegalsubsidies that Boeing has received in the past and continues toreceive from U.S. federal and state governments ... Boeing hasneither paid back nor eliminated the illegal subsidies," said aspokeswoman for Airbus.

Washington is threatening up to $10 billion in sanctions inthe dispute, while Brussels is threatening $12 billion.

However, most observers expect both sides to eventuallynegotiate a settlement to end the dispute.

(Reporting by Robin Emmott; Editing by Kevin Liffey and EricWalsh)

((robin.emmott@thomsonreuters.com)(+32 2 287 6835)(ReutersMessaging: robin.emmott.thomsonreuters.com@reuters.net))

Keywords: EU US/BOEING