Wed, Mar 14, 2012 - Page 10 News List

WTO rules Boeing received US$5bn in illegal US subsidies

SAVING FACE:Though less than what Brussels alleged Boeing received, the EU said it felt vindicated by the ruling, while the US said it was a victory for US workers


A WTO appeals panel upheld on Monday an earlier finding that US planemaker Boeing Inc received at least US$5 billion in subsidies that hurt its European archrival and were prohibited under international trade rules, but it was far less than the EU had alleged in its complaint.

The amount is also less than the US$18 billion in illegal state support over four decades that the US has alleged that rival Airbus, based in Toulouse, France, received during the same period. A WTO appeals panel ruled in a parallel case in May last year on a complaint brought by the US that Airbus also received state subsidies from the EU that hurt Boeing, but not all of them were illegal.

As usual, Brussels and Washington each claimed a measure of victory in their seven-year-old tit-for-tat dispute over financial aid to their respective airplane manufacturers.

EU Commissioner for Trade Karel De Gucht called Monday’s ruling vindication of the “EU’s long-held claims that Boeing has received massive US government handouts in the past and continues to do so today.”

De Gucht said Airbus has lost US$45 billion in sales due to illegal Boeing subsidies and Boeing would not have been able to launch its 787 “Dreamliner” without government support. He added the ruling confirms that Boeing was due to get US$3 billion to US$4 billion in illegal aid due to tax measures from Washington state, where it was formerly based.

However, his counterpart, US Trade Representative Ron Kirk, called the ruling “a tremendous victory for American manufacturers and workers.” He also said that the US already complied with part of the ruling by eliminating measures that made possible US$2 billion of the more than US$5 billion of prohibited subsidies.

Kirk said US subsidies to Boeing have cost Airbus 118 lost aircraft sales, while EU subsidies for Airbus have cost Boeing 342 lost aircraft sales.

“It is now clear that European subsidies to Airbus are far larger — by multiples — and far more distortive than anything that the United States does for Boeing,” he said.

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