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Confirmed after 10 years: $8.7 billion for Boeing is OK

Staff Writer |
Boeing won a round in a long-running U.S. trade dispute with the European Union over government backing for the planemaker and competitor Airbus SE.

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The World Trade Organization’s appellate body overruled a lower-level finding that $8.7 billion in tax incentives awarded by Washington state to Chicago-based Boeing for the development of the 777X jetliner constituted the most serious transgression of subsidy restrictions.

The appellate body isn’t making a recommendation in the dispute, it said Monday in a statement.

“This was a sweeping and clean win for the United States,” Boeing General Counsel J. Michael Luttig said in a separate statement. “The latest of the false claims Airbus and its government sponsors have made has now been rejected by the WTO.”

The U.S. and the EU have spent more than a decade tangling over government efforts to help Boeing and Toulouse, France-based Airbus defray billions of dollars in costs to create commercial aircraft.

The WTO ruling on Monday effectively ends the dispute over aid provided to Boeing by the state to ensure the planemaker would manufacture the 777X and its carbon-fiber wing in Washington, although two other cases are still pending.

The three-judge appellate panel overturned an earlier WTO finding that a 40 percent reduction in a Washington state levy on 777X gross receipts was a prohibited subsidy.

While the tax relief spurred Boeing to build the new jetliner at its factory in Everett, Washington, the aid didn’t prompt the planemaker to favor domestic parts over imports, the panel said.

The appellate body also rejected Europe’s contention that six other elements of the state’s incentive package were illegal. No further appeal is available to the EU on this case.

The ruling doesn’t preclude the 777X subsidies from being used in a separate and broader case brought by Airbus against Boeing in response to the U.S. manufacturer’s initial application against its rival in 2004.

That case is still in its compliance phase and has separately determined the subsidies to be “actionable,” a lesser but still illegal transgression of WTO rules, Airbus said in a statement.