By Canadian Press

Trade panel: Boeing got unfair US tax breaks, hurting Airbus

Mar 28, 2019 | 11:08 AM

GENEVA — Delivering final word in a nearly 14-year standoff, a World Trade Organization body has ruled Boeing received illegal U.S. subsidies via tax breaks from Washington state that damaged sales by European archrival Airbus.

The decision by the WTO’s appellate body considered whether planemaker and defence company Boeing had complied with a 2012 ruling that found it received at least $5 billion in subsidies that were prohibited under international trade rules.

Except for the relatively small Washington state tax breaks — which the U.S. says come to around just $100 million a year — Thursday’s ruling found no grounds upon which the European bloc could seek damages from an arbitrator.

The verdict — one of several disputes pitting Boeing and Airbus in recent years — comes as Boeing has been facing concerns over its 737 Max aircraft following a fatal crash in Ethiopia this month and another off the coast of Indonesia last year. And the Trump administration has taken a hard line against the Geneva-based WTO over administration allegations that the trade body’s rulings are unfair to the United States.

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Both sides — as has often been the case in such high-stake standoffs — claimed “a major win” from Thursday’s ruling.

The European Union saw the ruling as “vindicating the EU’s long held position that the United States has taken no steps to comply with WTO rules on support to Boeing.”

In a statement, EU Trade Commissioner Cecilia Malmstrom said: “The Appellate Body has now settled this case definitively, confirming our view the U.S. has continued to subsidize Boeing despite WTO rulings to the contrary.”

Airbus went further, noting that the WTO would allow the 28-nation bloc to seek countermeasures against U.S. products if the United States doesn’t comply.

“This is a clear victory for the EU and Airbus. It vindicates our position that Boeing, while pointing fingers at Airbus, has not taken any action to comply with its WTO obligations, contrary to Airbus and the EU,” Airbus General Counsel John Harrison said.

The U.S. Trade Representative’s office — just like Airbus — called the decision “a major win” and noted that the only victory by the European Union was over a Washington state tax measure worth an average annual value of approximately $100 million from 2013-2015.

The WTO ruling found that the Washington state tax breaks had led to lost sales of Airbus’ A320neo and A320ceo aircraft in five sales campaigns.

Boeing, meanwhile, similarly focused on the parts of the rulings in its favour, saying the WTO had rejected “every allegation of unlawful subsidies to Boeing with the single exception of one measure — the Washington state business and occupancy tax.”

“We trust that our example will prompt Airbus and the European Union to immediately bring themselves into full compliance with the substantial rulings against these parties by the WTO.”

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Wiseman reported from Washington.

Jamey Keaten And Paul Wiseman, The Associated Press