The World Trade Organization (WTO) upheld recently much of its ruling from last year that Boeing [BA] received some improper U.S. government support but not as much as the European Union (EU) alleged.
This decision by the WTO’s Appellate Body, announced recently, is being hailed as a victory by both U.S. and European officials on opposite sides of the long-running trade dispute.
“Today’s announcement is a validation of what I have been saying all along: Boeing has had to play on an uneven playing field as Airbus has juiced up on illegal fiscal steroids,” company supporter Rep. Rick Larsen (D-Wash.) said.
The trans-Atlantic trade dispute–which also involves a U.S. challenge to subsidies the EU gave Airbus–was particularly heated in Washington, D.C., when EADS, an Airbus company, competed for the lucrative Air Force tanker contract that Boeing ultimately won.
U.S. Trade Representative Ron Kirk said recently that the WTO Appellate Body rejected the appeal to the trade organization’s determination last year that Chicago-based Boeing received more than $5 billion in unauthorized U.S. aid.
Kirk portrayed the decision as a U.S. victory, because the WTO rejected most of the claims the EU made about Boeing receiving trade-distorting subsidies from the U.S. government. European officials had alleged Boeing received $19 billion in illegal U.S. subsidies between 1989 and 2006.
“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,” Kirk said in a statement.
The WTO Appellate Body determined last May that Airbus received $18 billion in subsidies from EU nations, most of which was deemed illegal.
“The United States is ready to address all of the WTO findings, and we expect Europe to do the same,” Kirk said recently.
European firm Airbus, however, issued a statement calling the WTO decision a “sweeping loss for Boeing.”
The “decision is a broad repudiation of the U.S.’s arguments in this case –rejecting every single U.S. appeal regarding the subsidies given to Boeing and nearly all of its appeals as to the competitive harm that those subsidies impose, while accepting every single EU point of appeal,” it said.
“Despite earlier Boeing claims that only minimal actions to comply with WTO rules were necessary, it has become clear today that Boeing will have to make major changes to comply with this final WTO ruling,” Airbus charged.
Boeing maintained that the new decision “confirms that in terms of amount, effect and nature, U.S. government support to Boeing is minimal in comparison to the massive European subsidies provided Airbus.”
Kirk’s office interprets the U.S. subsidies the WTO faulted–as reflected in the appellate decision–as amounting to “between $3 billion and $4 billion.” The trade organization did not call for removal of some of the $5 billion in identified U.S. financial support.
The U.S. aid covered by the Appellate Body’s findings are made up of research funded by the Pentagon and NASA, along with tax breaks from the state of Washington and city of Wichita.
The next step in the Boeing subsidy case will involve a WTO Dispute Settlement Body, which is expected to adopt the report later this month. After that, the United States will have six months “to come into compliance with the WTO rulings,” according to Kirk’s office.
Boeing said in a statement it is “prepared to work with the U.S. government as it determines what steps, if any, are necessary to address the WTO’s decision.” It said it is “fully committed to compliance with WTO rules,” charging “Airbus has not shown the same commitment to compliance with the WTO’s decisions and rules.”