A World Trade Organization appellate body panel has rejected the European Union’s claim that a Washington state tax unfairly benefited Boeing’s 777X program, but Europe’s Airbus says the subsidy spat is far from over.
A World Trade Organization Appellate Body rejected a case brought before it by the European Union alleging that the United States provided prohibited subsides to aircraft manufacturer Boeing.
Specifically, the European Union challenged seven Washington state tax measures, alleging that they were contingent on Boeing’s use of domestically produced fuselages and wings over imports of these components for its new 777X series planes.
The appellate body’s decision follows a WTO compliance panel’s finding in June in a separate aircraft dispute that 28 of 29 U.S. programs challenged by the European Union were consistent with WTO rules. The panel in this case found only one Washington state tax program had “limited effects” contrary to the global trade body’s rules. That panel’s finding is currently on appeal before the WTO Appellate Body.
The United States has pursued similar WTO disputes against the European Union, accusing it of giving Airbus billions of dollars in subsidies. A WTO compliance panel sided with the United States in September 2016 when it found that the European Union failed to achieve compliance with its WTO obligations regarding its aircraft manufacturing subsidies.
“Just as the EU lost on nearly all claims against the United States in June 2017, today’s WTO report further confirms that the EU cannot justify their own illegal subsidies by hiding behind groundless claims against the U.S.,” said U.S. Trade Representative Robert Lighthizer in a statement. “The EU should immediately come to the table on a solution that will end all its WTO-inconsistent subsidies.”
“The WTO has rejected yet another of the baseless claims the EU has made as it attempts to divert attention from the $22 billion of subsidies European governments have provided to Airbus and that the WTO has found to be illegal,” added Boeing General Counsel J. Michael Luttig.
Luttig said the European Union and Airbus, “meanwhile, continue to be in flagrant breach of WTO rulings and must eliminate the massive illegal subsidies the WTO said a full year ago had not been addressed, or risk U.S. sanctions against European exports.”
Airbus fired back, citing the impact of Boeing’s government subsidies have added up to about $100 billion in lost sales for the giant European aircraft manufacturer. The company plans to continue to fight Boeing in the WTO, unless a negotiated agreement on government subsidies is reached to end the longtime feud.
“Boeing illegal subsidies are still illegal and need to be removed,” said Rainer Ohler, Airbus’s executive vice president of communications, in a statement. “The ‘game’ is far from over.”
WTO grounds EU’s latest Boeing subsidy challenge
