1. WTO says US failed to fully comply in Boeing subsidies dispute

WTO says US failed to fully comply in Boeing subsidies dispute

The World Trade Organization said today the United States had not fully complied with a 2012 ruling ordering it to halt subsidies to Boeing, in a partial victory for rival aircraft maker Airbus and the EU.

By: | Geneva | Published: June 9, 2017 11:36 PM
WTO, US, Boeing subsidies dispute, aircraft maker, Airbus,  EU The WTO ruled in March 2012 that billions of dollars of subsidies to Boeing were illegal and notified the United States to bring them to an end. (Reuters)

The World Trade Organization said today the United States had not fully complied with a 2012 ruling ordering it to halt subsidies to Boeing, in a partial victory for rival aircraft maker Airbus and the EU. The ruling from a WTO panel was the latest blow in the decade-long clash between the titans of the civil aircraft industry, which has seen both Airbus and Boeing score points along the way. The WTO ruled in March 2012 that billions of dollars of subsidies to Boeing were illegal and notified the United States to bring them to an end. But just a few months later, the European Union filed a new complaint with the global trade body, alleging that Washington was not complying with that order. In the ruling published Friday, WTO said it had concluded that the state of Washington had continued to dish out subsidies totaling $325 million in the form of tax cuts to Boeing between 2013 and 2015.

It agreed with Brussels that the United States had not taken “appropriate steps to remove the adverse effects or … withdraw the subsidy.” The EU hailed the ruling, saying in a statement that it confirmed: “that the United States has taken no appropriate action to comply with its obligation to withdraw subsidies declared illegal … or to remove their adverse effects.” “The panel agrees that the US has simply ignored existing WTO rulings and has continued to subsidize Boeing,” EU Trade Commissioner Cecilia Malmstrom said in the statement. But the WTO ruling also rejected significant portions of the EU complaint, finding that Brussels had failed to demonstrate that US subsidies after 2012 to Boeing’s research and development programs were harming EU interests through lost sales and price cuts.

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Washington, therefore, chose to see the ruling as a victory, pointing out that the WTO panel had found that 28 of the 29 programs it examined were in compliance. “The panel found only one state-level program … to be contrary to WTO rules,” the US government said in a statement. “The United States disagrees and plans to appeal this limited finding,” it added. The EU has also been reprimanded by the WTO during the tit-for-tat conflict between Airbus and Boeing. In September, a WTO panel found that Brussels had not respected a 2011 ruling ordering it to take steps to withdraw several support and subsidy programs for Airbus. The WTO did not put a value on those programs but Boeing said they amounted to $22 billion worth of illegal support for Airbus development and sales.

The EU has appealed against that decision, insisting that the subsidies in question had been discontinued. US Trade Representative Robert Lighthizer meanwhile insisted that Friday’s ruling proved that “the United States does not provide subsidies even remotely comparable to the uniquely large and uniquely harmful EU subsidies to Airbus.” The WTO, which aims to create a level playing field in global trade, does not have the ability to force compliance with its rulings but can approve retaliatory measures which in theory can pressure trade manipulators to fall into line.

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