The Strategist

US declares victory in Boeing subsidies dispute

09/05/2017 - 14:43

The World Trade Organization rescinded the decision that the $ 8.7 billion tax relief that the US government granted to Boeing was considered illegal. In late December last year, the States appealed on this case.

Boeing Dreamscape
Boeing Dreamscape
In November 2016, the WTO recognized that the United States illegally subsidized the US aircraft manufacturing corporation. The World Trade Organization agreed that the US authorities provided Boeing with support in the form of tax incentives for deployment of production of the 777X airliner in Washington State, and this was a violation of international trade rules.

The EU filed an appropriate complaint at the end of 2014. The European Commission noted that the decision of the US authorities to extend preferential taxation for Boeing from 2024 to 2040 is illegal under WTO rules. As a result, the World Trade Organization agreed with the claims from Europe. In late 2016, the EU stated that the WTO decision was "a great victory for the EU in the dispute with Boeing." Media then quoted the representative of the European Commission on Agriculture and Trade Daniel Rosario on this issue. He noted that the EU expected that "the US would respect the rules, adhere to fair competition and withdraw subsidies without any delay."

However, the United States decided to appeal against the WTO decision. In general, the US and the EU have spent more than a decade to figure out whether the authorities were helping Boeing and Airbus to build commercial aircraft. The published resolution of the WTO actually puts an end to this dispute.

"This has become a large-scale and pure victory for the United States," said Michael Leutig, the chief legal adviser to Boeing, in a statement. "False statements by Airbus and its sponsors from the government were rejected by the WTO."

In particular, in September last year, the World Trade Organization took the side of the US in a dispute with the EU over the provision of subsidies to the European aircraft corporation Airbus. The WTO commission concluded that EU subsidies for Airbus did not meet the standards of the organization before 2011, which provided "unfair advantages" to the American company Boeing. The total amount of subsidies provided by Airbus from the EU and the authorities of individual countries is estimated at $ 22 billion. 

In June 2010, the Arbitration Commission of the WTO recognized that subsidies from Airbus by EU governments (Germany, France, Great Britain and Spain) were inadequate to the norms of the organization.