Boeing continued to illegally enjoy tax subsidy from the U.S. – WTO

Boeing has continued to enjoy tax subsidy from the United States says the World Trade Organization (WTO) on Thursday, 28th March, 2019.  The United States has been accused to have ignored the directives of the WTO to discontinue a subsidized tax break for Boeing by the United States.

According to the European Union, WTO appeal ruling had vindicated its claims that Boeing continued to receive illegal subsidies, but the United States said only one measure, a Washington state tax break worth around $100 million annually, had been found still to violate the rules.

Since 2004 the WTO has been engaged in a battle to stop what it described as an illegal aid to the giant aeronautic manufacturing companies Boeing and Airbus. The U.S. and the EU have been caught paying billions of dollars of subsidies to gain advantage in the global jet business, and asked to stop or face potential sanctions. Thursday’s appeal ruling showed that the United States did not stop all subsidies when asked to do so, echoing an earlier finding against the EU.

According to the WTO’s Appellate Body, effectively the supreme court of world trade, ruled that the business and occupancy (B&O) tax rate reduction in Washington state had given Boeing an edge over its competitor, Airbus and had significantly cut Airbus sales in five particularly price-sensitive sales campaigns.

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European Trade Commissioner, Cecilia Malmstrom in a statement stated the,“The Appellate Body has now settled this case definitively, confirming our view the U.S. has continued to subsidize Boeing despite WTO rulings to the contrary.”

In what it described as a victory for the U.S., Robert Lighthizer who is the Trade Representative stated that the WTO had found only one illegal subsidy while upholding an earlier rejection of EU claims that Boeing’s commercial aircraft programs received over $10 billion in illegal U.S. subsidies. He added that, “This report confirms what every other WTO report on these issues has found: the United States does not provide support even remotely comparable to the exceptionally large and harmful EU subsidies to Airbus.”

In response to the ruling, Boeing has come out with a statement that it would support the new decision.

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Airbus has come out with a statement saying that Boeing still received a raft of support and urged the United States to negotiate a “fair-trade environment” – a settlement proposal that the United States has so far rejected. In a technical point, it said the WTO had resurrected a wider group of U.S. subsidies which could be challenged later.

But Boeing said the slate had now been wiped clean of any unlawful subsidies in the United States, except for the Washington state measure which it agreed would now be amended.

Boeing has stated that, they believe that their example will prompt Airbus and the European Union to immediately bring themselves into full compliance with the substantial rulings against them by the WTO.

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In an earlier ruling which took place last year the WTO found the EU guilty for failing to remove illegal subsidies for two airplane programs launched by Airbus, the A350 and the A380 – the world’s largest airliner which Airbus has since decided to stop building due to poor sales.

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