LONDON/PARIS (Reuters) - Shares in Airbus (PA:AIR) and other key French exporters fell on Monday as Europe and the United States edged closer towards tit-for-tat sanctions in a long-running dispute over aircraft subsidies.
The World Trade Organization has approved a U.S. request to impose tariffs on some European goods in the latest chapter of a two-way dispute over aircraft subsidies which could also lead to European reprisals, two people familiar with the case said.
The scope of the decision, which had been widely anticipated, is due to be announced at the end of the month.
Both sides have won partial rulings in their favour in a 15-year dispute involving billions of dollars of domestic support for planemakers Airbus and Boeing (N:BA). But the United States is first in line to take action since its case is running about 9 months ahead.
Washington has sought permission to target European aircraft and aerospace parts, as well a range of industries including food, wine, tractors and luxury goods, as part of an $11.2 billion package of proposed tariffs against the European Union.
The final amount will depend on WTO arbitrators and Washington must then choose from a list of goods totalling more than $20 billion that it has identified as potential targets, before putting tariffs into effect up to the authorised limit.
Shares in Airbus, which relies on a flow of parts to feed an assembly line in Alabama, and which also counts U.S. airlines among its major customers for aircraft assembled at its main plants in Europe, fell 3.2% in early trading.
Luxury goods group LVMH (PA:LVMH) fell more than 2%. The two major exporters were the biggest fallers on the Paris CAC 40 (FCHI), which was down 0.7%.
Hermes International (PA:HRMS) fell 1.5%.