The EU filed a new trade case against the US on Friday, alleging “billions of dollars” in illegal subsidies have been offered to the aircraft maker Boeing, the WTO said in a statement.
The European case claims that a package of tax breaks offered by Washington state to induce Boeing to build its planned 777X jet there would violate WTO rules and give the US plane-maker an unfair advantage over its European rival, Airbus.
The EU’s complaint focuses on a US$8.7 billion incentive program passed by the Washington state legislature in November last year that was aimed at securing assembly work for the 777X — a stretched version of Boeing’s popular wide-body 777 aircraft — through 2040.
The deal committed Boeing to locating production of the plane’s wings and final assembly of the finished aircraft exclusively in Washington state.
The new dispute between the world’s two biggest makers of commercial aircraft is part of a trans-Atlantic trade battle over billions of dollars in supposed civil aircraft subsidies.
The dispute dates back to 2004 and remains unresolved.
The European Commission said in a statement that the tax incentives being provided to Boeing for the 777X were of the same type that Washington state had given the company for development of the 787 Dreamliner in 2006, which the WTO deemed illegal in 2012.
Despite that determination by the WTO, the tax incentives for the 787, which the EU estimates at more than US$3 billion, are still in place and are not scheduled to expire until 2024.
Airbus chief executive officer Fabrice Bregier has repeatedly criticized the tax breaks awarded to Boeing and has called for the EU to take action against the US.
At an air show in Germany in May, Bregier contended that the value of the incentives to Boeing exceeded the total development costs for the 777X.
“We can’t face competitors that are heavily subsidized,” Bregier said at the time. “It is just not acceptable.”
Office of the US Trade Representative chief counsel Tim Reif in a statement said that the EU’s new claims “lack any foundation.”
Reif added that he was disappointed with the decision to file a new complaint before the current compliance process has concluded.
“They are not serious about moving towards a constructive resolution,” Reif said. “When the EU is ready to resolve this dispute on the basis of WTO rules, rather than just dragging it out, they will find us ready.”
Boeing spokesman Marc Birtel said the EU’s action is a “diversion” and added that the tax breaks granted to Boeing by Washington state were equally available to all aerospace manufacturers, “including Airbus and its suppliers.”
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