Ongoing trade battle between US and EU sees WTO rule against Boeing

In a further episode of the ongoing battle between Boeing and Airbus which dates back over 10 years and which relates to disputes over government handouts provided to both companies, the World Trade Organization (WTO) has targeted Boeing and a key tax benefit provided for its latest long-haul jetliner, the wide-body 777X, indicating that it contravenes international trade rules. The WTO has given the U.S. 90 days to withdraw the subsidy, though the U.S still has the right to appeal the decision.
According to the EU Trade Commissioner, Cecelia Malmström, “We expect the U.S. to respect the rules, uphold fair competition, and withdraw these subsidies without any delay.” However, J. Michael Luttig, Boeing general counsel, has indicated that the company expected “every aspect” of the Washington state incentives to remain in place after any appeal.
The current ruling relates to part of the case filed by the European Union (EU) which was filed with the WTO in December 2014 against the U.S. and which was part of a larger long-standing dispute over subsidies given to the two aircraft manufacturers. In 1992 the two companies settled a previous disagreement, but in 2004 the U.S walked away from it amid claims that Airbus had an unfair advantage.
The two companies have accused each other of providing billions of dollars in illegal government assistance, sparring repeatedly over the value of state aid. The EU Is claiming that the current level of subsidy stands at US$5.7 billion, while U.S. have indicated the value is nearer US$50 million.
In a statement from Matt McAlvanah, a spokesman for the U.S. Trade Representative, “This case is a small fraction of the overall aerospace dispute, on which the WTO has found overwhelmingly in the United States’ favor.”
In September, the WTO determined the EU had failed to properly remove subsidies granted to Airbus in an earlier case and is expected to pass similar judgment on the U.S.
In renewing his call for Boeing to return to the negotiating table, Airbus Chief Executive Officer, Tom Enders, said that: “The only way out of the ridiculous series of disputes initiated by the U.S. is to agree on a set of globally applicable rules for the support of the civil aircraft industry, which would benefit both sides of the Atlantic.”
Boeing has made it clear its position hadn’t changed and that it will not engage in talks until the EU had complied with WTO rules.