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WTO reiterates ruling against U.S. tax breaks for Boeing planes

Staff Writer |
The World Trade Organization (WTO) upheld on Friday its decision that Washington provided illegal tax breaks to aircraft maker Boeing in a trade ruling that favors European Union rival Airbus.

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WTO ruled in its appellate body report that "the European Union established that the effects of the Washington State tax rate reduction are a genuine and substantial cause of significant lost sales of A320neo and A320ceo families".

The U.S. tax break is also "a threat of impedance of imports of the A320ceo to the United States" and a threat of impedance of exports to the United Arab Emirates, the report said.

Acting on behalf of Airbus, the EU requested consultations with the U.S. in December 2014, alleging that Washington's conditional tax incentives relating to the development, production and sale of Boeing's 777X jetliner were prohibited under WTO trade law.

However, WTO rejected the EU's claims that the original adverse effects of the pre-2007 aeronautics R&D subsidies and some other subsidies continue as significant price suppression and lost sales for Airbus.

Since more than a decade ago, Boeing and its European rival Airbus have been in a trade battle, in which each company accuses the other of taking billions of illegal state aid.

The EU requested the WTO to establish a panel to probe into alleged U.S. subsidies of up to $19.1 billion through tax and non-tax incentives by various municipalities to its largest aircraft maker Boeing in January 2006.

The panel report over the case came out in March 2011. Both of them later on decided to appeal to the appellate body, which released its final report in March, 2012.

The U.S. said afterwards that it intended to implement the recommendations and rulings in the Boeing case within six months.

However, in October 2012, the EU requested the establishment of a compliance panel, after reviewing U.S. measures to comply with the rulings and considering that it maintained a series of subsidies.

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