US state subsidies to Boeing are legal: WTO

The two aviation giants have been locked for years in a sprawling set of disputes at the Geneva-based WTO.

Monday’s ruling concerns the so-called “baby Boeing” case that relates only to tax breaks and other incentives provided by Washington State to support production of Boeing’s 777X, which is set to take to the skies in 2020.

Last November, WTO judges found that one of the subsidies Washington State offered was “prohibited” as it encouraged the use of domestic materials, and thus caused trade distortions.

The United States, acting on behalf of Boeing, appealed the decision, while the EU launched a “cross-appeal” for Airbus, insisting that seven of Washington State’s Boeing benefit schemes violated the rules of the 164-member WTO.

Brussels targeted benefits such as a reduced business tax rate, tax credits and exemptions.

The United States secured an outright victory in Monday’s ruling, which is not subject to appeal, the WTO said.

“The latest of the false claims Airbus and its government sponsors have made has now been rejected by the WTO,” Boeing general counsel J. Michael Luttig said in a statement.

“This was a sweeping and clean win for the United States,” he added.

According to previous Airbus estimates, Washington State has given Boeing tax breaks worth nearly nine billion dollars in a scheme scheduled to run through 2040.

Boeing has dismissed those numbers, putting the benefits to date at a maximum of $1 billion.

Brussels and Washington have two larger cases pending at the WTO, centred on various claims about allegedly illegal subsidies for their respective aviation industries.

Last September, a WTO panel found that Brussels had not respected a 2011 ruling ordering it to take steps to withdraw several support and subsidy programmes for Airbus.

Boeing says that illegal support amounts to $22 billion.

Meanwhile, a separate 2012 case on benefits Boeing received from federal, state and local governments in the US is still being litigated.

Reacting to the ruling, Airbus restated its view that the seemingly never-ending set of tit-for-tat battles does not serve the best interests of the aviation industry.

“This transatlantic spat, which lead the WTO to a huge amount of serious work and a large number of important panel reports over many years, can only finally be resolved by negotiations aimed at finding a global agreement to come to a level playing field in government support for the large civil aircraft industry,” the company said in a statement.

The WTO’s dispute settlement system has faced fresh scrutiny since President Donald Trump’s trade office indicated it may start ignoring rulings that hurt US interests.