WTO Rules That US Continued One Illegal Subsidy for Boeing It Promised to End; US, EU Claim Wins

The World Trade Organization ruled that the U.S. did not comply with a previous order to end a Washington state subsidy for Boeing manufacturing, which, the Appellate Body said, cost Airbus sales in 2008, 2011, 2013 and 2014, to Fly Dubai, Delta, Icelandair and Air Canada.

The Appellate Body, which released its findings March 28, also reversed earlier elements of the decision that had sided with Boeing. It said that Boeing receives a tax concession for exports, that R&D credits helped it launch the 787 sooner, and that South Carolina subsidies for a Boeing assembly plant may distort trade. But those planks of the ruling do not come with an estimate of the cost to Airbus in terms of lost sales or discounts it was forced to offer to get sales.

Both the U.S. and the EU spun the decision as a win. "Today's ruling is a welcome one for the EU, its aircraft-producing industry and workers across EU Member States in this strategic sector," EU Trade Commissioner Cecilia Malmstrom said. "The Appellate Body has now settled this case definitively, confirming our view the US has continued to subsidise Boeing despite WTO rulings to the contrary."

“For years, European governments have provided massive subsidies to Airbus that dwarf any U.S. subsidies to Boeing,” U.S. Trade Representative Robert Lighthizer said. "This report confirms what every other WTO report on these issues has found: the United States does not provide support even remotely comparable to the exceptionally large and harmful EU subsidies to Airbus."

The USTR claimed that the value of the Washington state program highlighted in the report was worth $100 million annually, far less than the billions in subsidies the EU identified in the case it brought in 2006. It said that U.S. government programs were subsidizing single-aisle and twin-aisle Boeing aircraft between 2004 and 2006. The U.S., after some losses in 2012, said it ended subsidies that are trade-distorting according to WTO rules. This appeal is about whether it did or not. The WTO found that any support for twin-aisle planes was immaterial to Airbus sales.

It's not clear what kind of compensation the EU could seek under WTO rules now. Malmstrom's statement did not mention that type of action. She just said the U.S. should stop its illegal subsidies.