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WTO rejects nearly all EU claims of unfair Boeing subsidies

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IFRS 9 Impairment How It Impacts Your Corporation And How We Can Help


WTO rejects nearly all EU claims of unfair Boeing subsidies

A World Trade Organization panel ruled largely in favor of the U.S. after the EU alleged that U.S. federal and state programs provided more than $10 billion in illegitimate subsidies to Boeing Co. large civil aircraft.

Calling it a "major win" for the U.S., the Office of the U.S. Trade Representative said in a March 28 news release that a WTO appellate panel rejected 28 of the 29 Boeing subsidization claims brought by the EU to the WTO.

The WTO did find that one program, a Washington state tax measure with a value of roughly $100 million in 2013-2015, was inconsistent with WTO rules.

The EU alleged that state and federal programs had provided $10.4 billion in subsidies to Boeing over six years, all while the U.S. has accused the EU of unfairly subsidizing Netherlands-based Airbus SE.

U.S. Trade Representative Robert Lighthizer said in the statement that the WTO report showed that the U.S. subsidies are not "even remotely comparable" to what he called the "large and harmful" subsidies the EU provides Airbus.

"For years, European governments have provided massive subsidies to Airbus that dwarf any U.S. subsidies to Boeing," Lighthizer said. "It is long past time for the EU to stop their subsidies and let our world-class aircraft manufacturers compete on a truly level playing field."

Boeing, embattled with issues surrounding its grounded fleet of 737 Max 8 and 737 Max 9 aircraft after two fatal accidents in the past year, said in a statement emailed to S&P Global Market Intelligence that it will "support the United States and Washington state as they take steps necessary to fully comply with today's ruling."

"We trust that our example will prompt Airbus and the European Union to immediately bring themselves into full compliance with the substantial rulings against these parties by the WTO," Boeing said.

The spat began in 2004 when the U.S. brought a challenge to the WTO alleging that the EU was unfairly subsidizing Airbus. The EU responded by bringing its own challenge to the WTO regarding the U.S. subsidies to Boeing.

The WTO found in 2011 that the EU provided Airbus with $17 billion in subsidies between 1968 and 2006, which the U.S. claimed caused Boeing to lose sales of more than 300 aircraft.

The USTR accused the EU of removing only two "minor" subsidies as a result while granting Airbus more than $5 billion in new subsidies, eventually filing a complaint in March 2012 that the EU was further violating WTO subsidization rules.

A WTO appellate panel report issued in May 2017 found that EU subsidies to Airbus caused lost sales of the Boeing 747 aircraft as well as other Boeing exports, and as a result, the U.S. requested authority to impose countermeasures of $11.2 billion per year, which it said equated to annual damage from the EU subsidies. A WTO arbitrator is evaluating that request, which the EU has challenged.

The two trading partners are also ready to begin talks toward a potential trade agreement, though some experts are skeptical of its progress due to potential looming auto tariffs and disagreements over agricultural goods access.