US Gave Boeing At Least $5.3 Billion In Illegal Subsidies: WTO Report
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The World Trade Organisation’s (WTO) Appellate Body has rejected an appeal by the US Trade Representative’s Office (USTR) to dismiss the findings from an earlier report that US plane maker Boeing Co had received “at least” $5.3 billion in illegal government subsidies between 1989 and 2006.
According to a WTO ruling in March last year, the US government provided Boeing with substantial financial aid over three decades, which subsequently cost European rival Airbus to lose over $45 billion in sales from 2002-2006.
The World Trade Organisation’s (WTO) Appellate Body has rejected an appeal by the US Trade Representative’s Office (USTR) to dismiss the findings from an earlier report that US plane maker Boeing Co had received “at least” $5.3 billion in illegal government subsidies between 1989 and 2006.
According to a WTO ruling in March last year, the US government provided Boeing with substantial financial aid over three decades, which subsequently cost European rival Airbus to lose over $45 billion in sales from 2002-2006.
Part of the unfair subsidies also included a $2.6 billion grant from US space agency NASA that helped Boeing to build its 787 Dreamliner plane, causing “serious prejudice to the interest of the European Communities” in the process.
But while the US government has been ordered to halt all illegal assistance to the Chicago-based plane manufacturer, the USTR still managed to claim the ruling as a “ tremendous victory” for the country, particularly as the European Union had previously accused the US of providing over $19.1 billion of aid to Boeing.
[quote]”This decision is a tremendous victory for American manufacturers and workers – and demonstrates the Obama administration’s commitment to ensuring a level playing field for Americans,” said US Trade Representative Ron Kirk in a statement cited by AFP.[/quote]Kirk also highlighted that the WTO had also ruled in a separate case that the EU gave Airbus over $18 billion in subsidised funding during the same period, though not all of the sum was found to be illegal under international rules.
“It is now clear that European subsidies to Airbus are far larger – by multiples – and far more distortive than anything that the United States does for Boeing,” chided Kirk.
Unsurprisingly, both Airbus and the European Commission took a different view to the WTO rulings, especially as the two cases were fundamentally different.
“When you’re discussing about Airbus you’re discussing about repayable launch investments where the distorting element are the interest rates, whereas in the United States’ case, the Boeing case, it’s about grants, it’s about cash gifts,” said EU Trade Commisioner Karel de Gucht during a news conference in Geneva.
The US subsidies are “a blatantly unlawful way of supporting” Boeing’s business, added De Gucht, as quoted by Bloomberg BusinessWeek.
The US and the EU have been locked in a tit-for-tat over their airplane manufacturers’ businesses for nearly 20 years, after the administration of former US President George W. Bush unilaterally walked out of a 1992 aircraft-aid accord with the EU. Since 2004, both parties have also filed countercases at the WTO over alleged illegal subsidies – with neither side willing to give in, over what analysts believe to be, a $3 trillion market over the next decade.
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According to one EU diplomat quoted by AFP, top-level talks between the governments of both parties may be the only way to end the state-aid dispute between Boeing and Airbus.
Richard Aboulafia, vice president of the Teal Group, an aerospace consulting group, also told BusinessWeek that the whole dispute between the US and Europe in the WTO was “quickly losing meaning”, particularly as neither side was willing to give in to any ruling.
[quote]“The whole point of the WTO is to give the other side the right to retaliate in some way. But if both sides claim that right, then we have a recipe for mutually assured destruction, and nobody wants that.”[/quote]
