WTO deems that some Boeing US subsidies were illegal

Federal and state subsidies granted to Boeing have been ruled illegal under World Trade Organisation (WTO) rules.

Since October 2004, the EU and US have been contesting at the WTO their governments’ respective support to Airbus in Europe and Boeing in the US.

According to the European Commission, the ruling confirms the EU’s position on all of its main claims — notably that between 1989 and 2006 the US federal and state governments granted WTO-incompatible subsidies to Boeing amounting to at least $5.3bn (£3.3bn). Planned future subsidies are estimated to be worth $3–4bn.

‘This WTO Panel report clearly shows that Boeing has received huge subsidies in the past and continues to receive significant subsidies today,’ said EU trade commissioner Karel De Gucht. ‘The US began this dispute in 2004 and now finds itself with a crystal-clear ruling that exposes its long-running multi-billion-dollar subsidisation of Boeing through federal and state programmes as illegal.

‘These subsidies have resulted in substantial harm to EU interests, causing Airbus to lose sales, depress its aircraft prices and unfairly lose market share to Boeing.’

Sources of subsidisation provided by the US are said to include R&D programme funds granted by NASA and the US Department of Defense (DoD) to Boeing, amounting to $1.3–2bn; NASA and DoD ’general support’ of $ 1.5bn; and Washington State tax breaks to a value of up to $4bn for the period 2006–24.

An EC statement said that these subsidies are in violation of WTO Rules as they constitute actionable subsidies that cause adverse effects to the interests of the EU and Airbus. The panel also confirmed that the federal FSC/ETI tax breaks for Boeing amount to prohibited subsidies, which, according to WTO rules, must be withdrawn by the US immediately.

The EC further claims that subsidies from multiple US government sources have enabled Boeing to develop new aircraft — and in particular the 787 Dreamliner.