The Appellate Body upheld WTO panel findings that the U.S. provided unfair state tax breaks to Boeing and that rejected EU claims of U.S. subsidies unfairly impacting Airbus aircraft sales.
A World Trade Organization (WTO) Appellate Body (AB) ruling issued on Thursday upheld a 2017 WTO panel’s finding that the U.S. unfairly provided subsidies to Boeing, and upheld the panel’s rejection of an EU claim that adverse effects of certain U.S. subsidies continued to cause serious prejudice against European manufacturer Airbus, according to a case summary.
Both the U.S. and EU, which appealed the June 2017 compliance panel ruling, claimed victory after the AB ruling.
The Office of the U.S. Trade Representative in a statement Thursday noted that compliance panel rejected EU arguments that 29 U.S. state and federal programs conferred $10.4 billion in subsidies to Boeing over six years, and that the panel found only a Washington state tax measure worth an average annual value of approximately $100 million from 2013 to 2015 to be WTO-inconsistent.
Thursday’s AB ruling confirms the Washington state tax measure is the only WTO-inconsistent program, USTR added.
“These findings stand in sharp contrast to the compliance appellate report issued last year in the U.S. challenge to EU subsidies to Airbus, which found the EU continued acting contrary to WTO rules in providing $9 billion in subsidized financing for Airbus to launch its two largest aircraft, the A380 and A350 XWB,” USTR said. “A WTO arbitrator is currently evaluating the U.S request to impose approximately $11 billion in annual countermeasures in response to the damaging trade effects of the EU subsidies.”
An EU spokesperson didn’t directly address an American Shipper question about whether it would seek WTO authorization to retaliate against the U.S. for the Washington state tax break, but said the AB ruling vindicates the EU’s long-held position that the U.S. has taken no steps to comply with WTO rules regarding its support of Boeing.
“Today’s decision marks the final step in the compliance proceedings launched in 2012 in this long running dispute,” the EU said in a press release. “The EU expects the United States to promptly comply with this final ruling.”
The EU originally filed the WTO case in 2006. The U.S. told the WTO Dispute Settlement Body (DSB) in September 2012 that it had withdrawn the all subsidies in question and removed their adverse effects.
The EU challenged the U.S.’s claim, and a compliance panel was established on Oct. 30, 2012. The EU also requested authorization by the DSB on Sept. 27, 2012, to take countermeasures on U.S. imports because of the U.S.’s failure to comply with WTO findings. WTO proceedings on the request were suspended, at the agreement of both parties, pending the outcome of compliance proceedings.
In addition to upholding the June 2017 compliance panel’s ruling on Washington state tax breaks, the AB also upheld the panel’s ruling that rejected an EU claim that the original adverse effects of pre-2007 U.S. research and development subsidies continued into the post-September 2012 period to cause serious prejudice in relation to sales of Airbus A330 and A350XWB aircraft, the case summary says.
The AB ruling recommends that the DSB request the U.S. to bring its measures found to be inconsistent with the WTO Subsidies and Countervailing Measures Agreement into conformity with its obligations under that agreement.
