31.03.2011
FLUG REVUE

EU sees win in WTO case against Boeing

The European Commission welcomed the WTO Panel report published today which found that billions of dollars in US Federal and State subsidies granted to Boeing are illegal under WTO rules.

This landmark ruling has clearly confirmed the EU’s position on all of its main claims, notably that between 1989 and 2006 the US Federal and State governments granted WTO-incompatible subsidies to Boeing amounting to at least US$ 5.3 billion. Planned future subsidies are estimated to be worth between US$ 3 to 4 billion.

“This WTO Panel report clearly shows that Boeing has received huge subsidies in the past and continues to receive significant subsidies today. The US began this dispute in 2004 and now finds itself with a crystal clear ruling that exposes its long-running multi-billion dollar subsidisation of Boeing through Federal and State programmes as illegal," said EU Trade Commissioner Karel De Gucht.

"These subsidies have resulted in substantial harm to EU interests, causing Airbus to lose sales, depress its aircraft prices and unfairly lose market share to Boeing. The detrimental costs to EU industry from this lengthy and onerous subsidisation run into billions of euro. We therefore welcome the WTO Panel's report and call on the US Government to take the appropriate steps that may assist to achieve a mutually agreed solution to this dispute.", Commissioner De Gucht added.

The report is supported by clear and solid findings from the Panel covering each of the main sources of subsidisation provided by the US, including: (i) R&D programmes funds granted by NASA and the US Department of Defense (DoD) to Boeing amounting to US$1.3 - 2 billion; (ii) NASA and DoD "general support" to the tune of US$ 1.5 billion; (iii) Foreign Sales Corporation (FSC) export subsidies – US$ 2.2 billion; and (iv) Washington State tax breaks to a value of up to US$ 4 billion for the period 2006-24.

All of these subsidies are in violation of WTO Rules since they constitute actionable subsidies which cause adverse effects to the interests of the EU and Airbus. The panel also confirmed that the federal FSC/ETI tax breaks for Boeing amount to prohibited subsidies, which according to WTO rules must be withdrawn by the US without delay.

These massive subsidies from multiple US Government sources have enabled Boeing to develop new aircraft, and in particular the 787 "Dreamliner", at much lower cost than would otherwise have been the case.

In contrast to the Panel in the Airbus case, this Panel quantified the amount of WTO-incompatible subsidies granted to Boeing. Support to Boeing has been and continues to be in the form of non-repayable grants or free access to government facilities, as opposed to that in the Airbus case where the most important instrument, Repayable Launch Investment (RLI), was considered to be WTO-compatible in principle, with the subsidy element being, for certain cases, solely the difference in conditions provided in comparison to other repayable commercial financing.




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