The World Trade Organization once again weighed into the longstanding dispute over government subsidies to The Boeing Co., and mostly cleared the U.S. of providing unfair support for the jet builder. Still, the global trade body said Boeing continues to benefit unfairly from Washington State business tax-rate reduction. Most of Boeing’s large commercial jets are assembled in Washington. The WTO said those “subsidies” had given Boeing an advantage with certain customers.
While agreeing with the plaintiffs — the European Union, in behalf of rival jet builder Airbus SAS and its EU-based suppliers — on the continuing existence of the subsidies, WTO also stated that no harm had been demonstrated to Airbus and its suppliers.
While the ruling is a narrow one, referring specifically to a 2012 decision on the Washington State tax issue, it is important inasmuch as that same tax has been applied to Boeing’s assembly of the new 777X wide-body aircraft. Last November, WTO ruled the expanded application of that tax is a subsidy violation, too – and the U.S. is continuing to contest that decision.
A statement by the U.S. Trade Representative indicated some satisfaction with the new ruling: "The panel found only one state-level program, which had an average value of $100-110 million in the 2013-2015 period, to be contrary to WTO rules. The United States disagrees and plans to appeal this limited finding."
Airbus also found some vindication in the decision, with CEO Tom Enders stating: “The amount of money involved completely distorts trade. There is absolutely no place for these unfair and anti-competitive practices in today’s modern and dynamic global marketplace, and the WTO should make it clear that no government or company can escape from their international responsibilities.”
For its part, Boeing issued a statement commending USTR for “another significant win in the long-running dispute between the United States and the European Union over aerospace subsidies.”
Boeing’s general counsel L. Michael Luttig asserted, "the EU and Airbus suffered yet another resounding defeat in this decade-long dispute. It is finally time for them to comply with their global trade obligations and eliminate and remedy the $22 billion of launch aid and other illegal subsidies that are harming U.S. aerospace companies and American workers."
The U.S. and the EU have been battling over subsidies to (respectively) Airbus and Boeing for more than a decade. Both sides have drawn "winning" rulings from WTO, but the allegations of subsidization are increasing as the two manufacturers develop new models and prepare to establish new production programs.
