Business

WTO largely backs Boeing in trade row, faults tax break

Published: 12:35 AM, June 10, 2017
Updated: 1:05 AM, June 10, 2017

GENEVA - The World Trade Organization largely cleared the United States of maintaining unfair support for Boeing Co <BA.N>, but said it had failed to withdraw a tax break in its main planemaking state that continues to cause trade fireworks.

The ruling added another page to an exhausting 13-year-old battle between the transatlantic plane giants just as a U.S. tribunal agreed separately to investigate Boeing's concerns about alleged price-dumping by Canada's Bombardier.

The WTO said the United States had failed to remove aid for Boeing, as alleged in a trade complaint brought by the European Union, but ruled that few of the subsidies hurt EU interests.

It found that one U.S. subsidy program, a business tax rate reduction in the state of Washington, where Boeing builds most of its aircraft, had "adverse effects", involving customers from the United Arab Emirates, Canada and Iceland.

Both sides claimed victory after the ruling, which is about whether Boeing complied with a 2012 decision that it had received billions of dollars of subsidies including aid from space agency NASA and tax breaks from Washington State.

"The panel found only one state-level program, which had an average value of $100-110 million in the 2013-2015 period, to be contrary to WTO rules. The United States disagrees and plans to appeal this limited finding," the office of the U.S. Trade Representative said.

European planemaker Airbus <AIR.PA> insisted the United States had not complied with the WTO's earlier decisions in the case and claimed it had suffered $100 billion of harm when combined with a follow-up complaint.

"The amount of money involved completely distorts trade ... and the WTO should make it clear that no government or company can escape from their international responsibilities,"  Airbus Chief Executive Tom Enders said in a statement.

The WTO said Boeing had failed to comply with part of the earlier 2012 ruling relating to tax breaks in Washington state.

Those tax breaks are now the subject of a new case, having been extended to cover Boeing's newest wide-body jet.

In November, the WTO defined the tax break to help Boeing develop its new 777X jet as a prohibited subsidy.

That decision, contested by the United States, is now working its way through the WTO's appeals tribunal.

The ruling is part of a series of tit-for-tat transatlantic complaints about aircraft subsidies that together make up the world's largest trade dispute, involving mutual accusations of support for Airbus and Boeing.

Bickering over financing for the $120 billion a year civil aerospace industry has widened in recent months as Brazil took Bombardier to the WTO and Boeing asked a faster U.S. tribunal to deal with its pricing complaint against the same company. REUTERS