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U.S.-E.U.: WTO rules Boeing got $5B in illegal US subsidies

by John HeilprinAssociated Press
March 12th, 2012

The World Trade Organization ruled Monday that U.S. planemaker Boeing received $5.3 billion in illegal government subsidies over a quarter-century, far less than what arch-rival Airbus received according to an earlier finding.

The two companies are locked in a long-running trade dispute over a market believed to be worth more than $3 trillion over the next decade. Each has complained to the WTO that the other is receiving state aid.

Last May, a WTO panel ruled on a U.S. complaint that European governments provided to Airbus, based in Toulouse, France, with $18 billion in subsidies, though not all were found to be illegal under international rules.

The European Union had hit back with allegations that Boeing got $19.1 billion in similar subsidies between 1989 and 2006.

While the WTO appeals panel did say on Monday that Boeing received illegal aid, the sums were far smaller than the EU alleged.

As usual, both sides claimed a measure of victory.

"The apellate body has now spoken in both the Airbus and Boeing cases," said Rainer Ohler, Airbus' spokesman. "Comparing the core claims made by both sides, the net outcome is clear: Boeing's cash grants are fundamentally illegal, while the system of loans to Airbus by European governments is legal and may continue. Boeing and the U.S. now will have six months to implement the WTO decision."

Boeing, however, said in a statement that the WTO ruling "slashed earlier findings of harm to Airbus from U.S. subsidies. The 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."

Now that the ruling is in, Boeing and Airbus are each required to prove they are complying with WTO rules.

Boeing emphasized that the U.S. government has already removed some $2 billion in prohibited subsidies, leaving about $3 billion still to be addressed.

The European Commission, whose complaint to the WTO was the subject of the ruling, said it welcomed the confirmation that Chicago-based Boeing also received billions of dollars in illegal subsidies.

EU Trade Commissioner Karel De Gucht called Monday's ruling vindication of the "EU's long-held claims that Boeing has received massive U.S. government handouts in the past and continues to do so today."

De Gucht said Airbus has lost $45 billion in sales due to illegal Boeing subsidies, and Boeing would not have been able to launch its 787 "Dreamliner" without government support. He added the ruling confirms that Boeing was due to get $3 billion to $4 billion in illegal aid due to tax measures from Washington state, where it was formerly based.

But his counterpart, U.S. Trade Representative Ron Kirk, called the ruling "a tremendous victory for American manufacturers and workers."

Kirk said U.S. subsidies to Boeing have cost Airbus 118 lost aircraft sales, while EU subsidies for Airbus have cost Boeing 342 lost aircraft sales.

"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," he said.

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