WTO Rules Against Boeing in U.S.-EU Trade Battle
November 28 2016 - 11:40AM
Dow Jones News
The World Trade Organization on Monday struck a blow against
Boeing Co., determining a key tax benefit granted for production of
its newest long-haul jetliner contravenes international trade
rules.
The tax was a central part of a case the European Union in
December 2014 filed with the WTO against the U.S. as part of a
wider protracted dispute over subsidies to aircraft makers.
The WTO said the U.S. should withdraw the subsidy within 90
days, though the U.S. can appeal the ruling.
"We expect the U.S. to respect the rules, uphold fair
competition, and withdraw these subsidies without any delay," said
EU Trade Commissioner Cecilia Malmströ m.
A Boeing official said the company expects an appeal will lead
to the WTO's judgment being overturned.
The wider dispute dates back more than a decade over government
handouts provided to Boeing and its European rival Airbus Group SE.
The two sides settled a previous disagreement in 1992, but the U.S.
walked away from that deal in 2004, arguing Airbus had an unfair
advantage.
Since then, the U.S. and EU have successfully challenged
subsidies to the other's large commercial airplane maker. The case
has seen repeated appeals.
At stake are potentially billions of dollars in tariffs the U.S.
and EU could impose on each other unless the WTO's subsidy concerns
are addressed. Those tariffs could be placed on goods and services
unrelated to aircraft or aircraft parts. The winning side isn't
obliged to impose tariffs, and the penalty stage could be delayed
again if the EU and U.S. make changes to the way the benefits are
provided.
Each side has accused the other of providing billions of dollars
in illegal government assistance, and the two have sparred
repeatedly over the value of state aid. The EU said the latest
prohibited subsidy that has to be withdrawn immediately amounts to
$5.7 billion. The U.S. said the value is $50 million.
The tax benefit was conferred for production of the 777X
widebody plane, an updated model Boeing is developing. The plane,
which can seat more than 400 passengers, is due to enter service
around the end of the decade.
The WTO in September determined the EU had failed to properly
remove subsidies granted to Airbus in an earlier case. Next year it
is expected to pass similar judgment on the U.S.
Airbus Chief Executive Officer Tom Enders renewed his call or
Boeing to return to the negotiating table: "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."
He said the financial backing being provided to other plane
makers in Canada, Russia and Asia made it critical to establish a
"global framework."
Viktoria Dendrinou contributed to this article.
Write to Robert Wall at robert.wall@wsj.com and Doug Cameron at
doug.cameron@wsj.com
(END) Dow Jones Newswires
November 28, 2016 11:25 ET (16:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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