Boeing – Image Pixabay
(GENEVA) – The EU has welcomed the World Trade Organisation’s ruling Thursday which it says vindicates the EU position that the United States has taken no steps to comply with WTO rules on support to Boeing.
The ruling concludes that the US has continued to subsidise the company illegally despite previous rulings condemning this behaviour. The Commission says this has This has caused “significant harm” to its European competitor Airbus.
It says the ruling by the WTO’s Appellate Body confirms the European Union’s position that the United States has failed to remove “the massive and trade distorting subsidies it is granting to Boeing”.
The WTO sided with the EU in its argument that several US measures, notably the Washington State tax programme and business incentives from South Carolina are in fact subsidies. The Appellate Body dismissed all of the US appeal points.
The EU Trade Commissioner Cecilia Malmstroem said the ruling would be welcome for the EU, its aircraft-producing industry and workers across EU Member States in this strategic sector: “The Appellate Body has now settled this case definitively, confirming our view the US has continued to subsidise Boeing despite WTO rulings to the contrary. We will continue to defend a level-playing field for our industry. European companies must be able to compete on fair and equal terms and today’s ruling is important in this respect.”
Significantly, the Appellate Body supported the EU claim that Boeing still benefits from an illegal tax concession granted by the US through an export support measure (through the Foreign Sales Corporation and Extraterritorial Income Exclusion, or FSC/ETI). This subsidy had already been qualified as prohibited at the first stages of the dispute. Prohibited subsidies are considered the most trade distortive category of subsidies and are illegal under WTO rules.
The Appellate Body also found that US subsidies to Boeing continue to cause severe damage to Airbus’ market opportunities, notably in the form of lost sales.
In 2012 the WTO ruled that the United States had granted massive subsidies to Boeing in violation of WTO rules. Between 1989 and 2006 Boeing benefited from NASA, US Department of Defence and Washington State/Kansas subsidies totalling over $5 billion. The subsidies allowed Boeing to sell its aircraft more cheaply, to the detriment of Airbus.
The WTO’s ruling marks the final step in the compliance proceedings launched in 2012 in this long running dispute. The EU says it expects the United States to promptly comply with this final ruling.
