WTO Denounces Illegal US Subsidies to Boeing

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Boeing 787 Dreamlike – – Photo Credit: Wikimedia Commons

The World Trade Organization (WTO) on Friday denounced the illegal payment by the United States of subsidies to the US aeronautic manufacturer Boeing, a decision considered a victory by its competitor Airbus and the European Union.
In a decision released Friday in Geneva, the WTO said it had examined the EU complaint and concluded that Boeing had benefited from a tax exemption between 2013 and 2015 despite promises made by the US to cancel all subsidies. 

In September 2012, the United States asserted to the World Trade Organization that it had abolished all its subsidies to Boeing in order to comply with a request by the Dispute Settlement Body (DSB) of the WTO in March 2012.

But the European Union had estimated that the American aircraft manufacturer continued to benefit from billions of dollars of subsidies, through the research and development programs of NASA and the US Department of Defense. 

In order to defend the interests of the European company Airbus, the EU therefore requested in October 2012 the setting up of a group of experts to examine the reality of the dismantling of this aid.

In its decision released on Friday, the WTO Panel of Experts rejected 28 of the 29 criticisms made by Brussels. The panel concluded that Boeing had benefited from $325 million in tax exemptions from the state of Washington between 2013 and 2015, “which has had a negative impact on the EU in terms of lost sales” for Airbus. 

“Given that the US has failed to comply with WTO recommendations and rulings, these recommendations and rulings remain enforceable,” concludes the WTO.

Each party has 60 days to appeal the decision.

The EU immediately welcomed the decision, which confirms that “the United States has failed to take appropriate action to comply with its obligations to withdraw subsidies declared illegal… or to eliminate adverse effects” .

“The panel agrees that the US simply ignored the existing WTO rules and continued to subsidize Boeing,” EU Trade Commissioner Cecilia Malmstrom said in a statement.

But as often in this kind of complicated cases, they alao cried victory on the American side, pointing out that 28 of the 29 accusations formulated by the EU and Airbus were rejected by the World Trade Organization.

“The panel found only one program at the state level (…) which is contrary to the rules of the WTO,” the US government said in a statement.

“The United States does not agree and is considering appealing this limited discovery,” he added.

US Trade Representative Robert Lighthizer described the decision as proof that “the United States is not granting subsidies comparable, even by far, to the particularly generous and particularly damaging subsidies that the EU pays To Airbus “.

Boeing and Airbus have been fighting since 2004 before the WTO about their reciprocal subsidies.

This is the longest and most complicated trade dispute in the world, with billions of Euros or dollars at stake.

In September 2016, it was the turn of the EU and some of its member states to be called to order by the Organization for subsidies to Airbus following a complaint by Washington.

WTO experts asked Brussels, as well as France, Germany, Spain and the United Kingdom, to comply with the rules of international trade. The EU appealed.

The latest case in this dispute: in December 2014, a WTO panel heard a complaint from the EU, and in November 2016 the panel had concluded that part of Washington state’s tax subsidies for the manufacturing of Boeing’s new long-range aircraft, the 777X, the rival of the Airbus A350, were in fact subsidies prohibited by WTO rules.

The United States appealed a month later and the panel’s decision could be announced in the fall.