WTO Reverses Ruling against Washington State Tax Incentive

Eleanor Steed
By Eleanor Steed September 5, 2017 17:13

WTO Reverses Ruling against Washington State Tax Incentive

The World Trade Organization (WTO) has issued an Appellate Body report rejecting the case brought by the European Union (EU) alleging that the United States provided so-called “prohibited” subsidies to Boeing.  The EU challenged seven Washington State tax measures, alleging that they were contingent on Boeing’s use of domestic fuselages and wings instead of imported fuselages and wings.  The Appellate Body disagreed, giving the United States a complete victory in this dispute.

This finding comes on the heels of a WTO compliance panel finding in June in a separate dispute that 28 of 29 U.S. programs challenged by the EU were consistent with WTO rules.  In that dispute, the compliance panel found that only a single Washington State tax program has limited effects contrary to WTO rules. That panel’s findings are now on appeal before the Appellate Body.

The official notice from the Office of the U.S. Trade Representative states: “These findings in the two aircraft cases brought by the EU are in sharp contrast to the findings of a different compliance panel in a dispute brought by the United States challenging the EU’s “launch aid” and other subsidies to Airbus.  In September 2016, that WTO compliance panel found that the EU had failed to achieve compliance with its WTO obligations, and had further breached WTO rules by giving Airbus billions of dollars in additional subsidies.  The EU subsidies appear to cause tens of billions of dollars in harm to Boeing.”

Boeing immediately issued its own statement.

“The WTO has rejected yet another of the baseless claims the EU has made as it attempts to divert attention from the $22 billion of subsidies European governments have provided to Airbus and that the WTO has found to be illegal,” said Boeing General Counsel J. Michael Luttig. “No further appeal of today’s decision is available to the EU,” he added.

“The latest of the false claims Airbus and its government sponsors have made has now been rejected by the WTO. The EU and Airbus, meanwhile, continue to be in flagrant breach of WTO rulings and must eliminate the massive illegal subsidies the WTO said a full year ago had not been addressed, or risk U.S. sanctions against European exports,” Luttig said.

Airbus retaliated with its own press release reminding industry observers that an ongoing separate review in the DS353 case has “confirmed that those subsidies are illegal and actionable causing massive harm to Airbus.  An obligation for their withdrawal or removal of their adverse effects remains applicable.”

Airbus reiterates its long-stated view that this transatlantic spat, which lead the WTO to a huge amount of serious work and a large number of important panel reports over many years, can only finally be resolved “by negotiations aimed at finding a global agreement to come to a level playing field in government support for the large civil aircraft industry”.

“Boeing illegal subsidies are still illegal and need to be removed. If it is a “No” or a “No No” does not make big difference in global fair trade & play”, says Rainer Ohler, Airbus Executive Vice President Communications. ‎“The “game” is far from over.”

Eleanor Steed
By Eleanor Steed September 5, 2017 17:13