WTO upholds ruling against Boeing subsidies
By Howard Schneider,
A World Trade Organization appeals panel on Monday upheld a ruling that Boeing received billions of dollars in improper subsidies from federal and state governments that helped it beat European rival Airbus out of dozens of airplane contracts.
But the ruling was nonetheless cheered as a victory by U.S. officials, who say it cites the United States for only a narrow set of subsidies, most of which no longer exist. In a separate ruling last year on European subsidies for Airbus, the WTO issued a broader finding against Europe’s practice of providing “launch aid” for Airbus — low-interest loans that the WTO found were central to the company’s development of new aircraft.
“This decision is a tremendous victory,” U.S. trade representative Ron Kirk said in a written statement. “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.”
The WTO cited the United States for $5 billion to $6 billion in improper subsidies for Boeing through 2006. European officials said the amount could rise to as much as $10 billion if promised future benefits — largely tax breaks in Washington state — are included.
Boeing, which splits the world market for long-haul aircraft with its European competitor, is the United States’ top exporter. The company also welcomed the ruling.
European launch aid for Airbus amounted to about $18 billion. While European Union officials argue it is improper to compare the two figures because launch aid involved loans, the WTO ruling found that the subsidized financing provided to Airbus “caused serious prejudice to the interests of the United States.”
With the WTO now having ruled against government programs on both sides of the Atlantic, officials in Brussels and Washington continued to spar over the need for follow-up action.
The European Union says it has already made the launch-aid program compliant with the WTO ruling. U.S. officials dispute this.
While the main U.S. subsidies to Boeing have ended, European officials said Monday that technology developed with government help benefits every Boeing plane that is made — indicating they expect that benefit to be offset in some way.
European Union Trade Commissioner Karel De Gucht, criticizing the United States for “$10 billion in handouts” to Boeing, said he was ready to start “unconditional discussions” with the United States over how to undo the effect of past government help to the aircraft industry and to discuss a framework for future assistance.