BOEING HIT BY WTO’S RULING

 
City A.M. Reporter
World Trade Organisation (WTO) judges have found aircraft maker Boeing received more than $20bn (£12.7bn) in US government subsidies challenged by the European Union and called for them to be withdrawn, an EU source said yesterday.

The confidential ruling, if confirmed, would add weight to European calls for a negotiated settlement to the transatlantic row over the aerospace industry – the biggest bilateral trade dispute – following WTO condemnation in June of illegal European subsidies for Boeing rival Airbus.

But in the past both sides have accused the other of putting out misinformation so early leaks must be treated with caution.


The confidential report, issued only to EU and US officials, will not be made public until possibly mid-2011.

Boeing argues any aid for which Washington is faulted pales in comparison with subsidies for Airbus that were resoundingly denounced by the WTO in a ruling in a parallel case. Both sides have appealed various findings in that case.

The European source said the WTO judges had backed EU complaints over some $17bn in research contracts from the US aerospace agency NASA and the Pentagon, and $4bn in tax breaks from Washington state.

The WTO judges found these payments broke WTO rules and should be withdrawn, the source said. The figures were not cited in the report but were derived from adding the respective claims.

But the WTO dispute panel did not find that aid challenged by the EU was prohibited – as it did in a ruling in the parallel case against Airbus subsidies brought by the US – which would have required faster remedies.


THE EU’S CASE | THE MAIN ISSUES RAISED

? NASA-funded federal research programmes have injected more than $10bn into Boeing. The US defends these funds as being payments for a service; the EU says they break WTO rules.

The US Department of Defense (Pentagon) has given Boeing $2.4bn worth of dual-use technology for its large civil aircraft, as well as access to the department’s facilities, equipment and staff.

Boeing received $726.4m worth of intellectual property rights in free patents, industry secrets and data rights from NASA and the Pentagon for its large civil aircraft.

NASA and the Pentagon paid Boeing another $3bn for independent research and to pay for Boeing government contract bids. US says these payments are legal commercial transactions.

Washington state gave Boeing $3.5bn in illegal tax breaks, tax rate discounts, interest subsidies and bond issuance. Illinois and Chicago gave Boeing a relocation package, tax credits and rent subsidies. Kansas supports Boeing with a $900m package of tax breaks and subsidised bonds.

Boeing is still eligible for $2.2bn of export subsidies the WTO has already ruled illegal.

All US support, which has helped Boeing launch its 787 Dreamliner, is non-repayable.