Boeing claims WTO victory; not so fast, claims Airbus

Sept. 3, 2017: Boeing once more claimed a sweeping victory in the endless battle over illegal subsidies at the World Trade organization.

Boeing issued a press release today touting a victory at the appellate level in which the WTO body rejected an earlier finding that Washington State tax breaks for the Boeing 777X were a “prohibited” subsidy.

Airbus countered that a parallel case found the tax breaks to be “illegal and actionable.”

The dueling press releases are below.

WTO Reverses Ruling against Washington State Tax Incentive
Appeal decision marks resounding defeat for EU efforts to justify illegal Airbus subsidies
Europe faces growing risk of sanctions as Airbus continues to ignore rulings against its illegal practices

The Office of the U.S. Trade Representative (USTR) achieved a significant victory today in its long-running dispute with the European Union over aerospace subsidies.

The WTO Appellate Body announced a reversal of last November’s prohibited subsidy ruling against a tax incentive for the production of the Boeing 777X in Washington state. It also upheld an earlier dismissal of the EU’s claims against the remainder of the incentives. Today’s ruling confirms that the tax treatment Boeing and others are receiving in Washington state is not a prohibited subsidy.

In addition to reversing the previous ruling on the tax incentive, the new ruling ends the most recent of two WTO cases the EU brought against the United States in retaliation for the successful U.S. challenge of the massive subsidies European governments provide to Airbus.

“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 has a long history of putting European taxpayer money at risk through the unsecured loans that created and continue to sustain the company. Now Airbus and its sponsor governments are putting other European exporters at risk of U.S. sanctions by blatantly ignoring WTO rulings and bringing counterclaims against the U.S. that have no basis in law or in fact,” Luttig said.

“By contrast, Boeing has supported U.S. government actions to comply with its WTO obligations. We supported and facilitated changes to Boeing contracts with NASA and the U.S. Department of Defense for R&D work that the WTO deemed inconsistent with its rules,” Luttig said.

“This was a sweeping and clean win for the United States,” he added.  “It is now up to the European Union to comply with the WTO findings against it, and end the enduring practice of launch aid, which Airbus’ government supporters have continued to provide to each and every Airbus model.”

WTO will move on to judge actionable Boeing subsidies to 777X

In a new round of the more than decade-long spat at the World Trade Organisation (WTO), the Appellate Body (AB) has today reversed a 28 November 2016 report which found that the Washington State tax subsidies that paid for Boeing’s development and manufacture of the 777 X aircraft were “prohibited” under the Agreement Subsidies and Countervailing Measures (ASCM).

However, 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.

 In total, combining the different WTO’s rulings addressing the illegal subsidies to Boeing, the total impact of the subsidies is estimated to add up to US$100 billion in lost sales to Airbus. 

 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.

 Airbus would like to take this opportunity to thank the European Commission and the governments of France, Germany, the UK, and Spain for their continued efforts to defend the industry and fair trade practices at the WTO.

“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.”

18 Comments on “Boeing claims WTO victory; not so fast, claims Airbus

  1. Wording is important “unfair” is not “illegal/prohibited”
    “Level playing field” need some fair play …

  2. Ho hum- just another PR release with part facts- part opinion- and a bit of deflection. FGatt92-WTO issues -judgements are still in play. AKA lawyers pension- lifetime job with great benefits.

    Ben there- tried that overa decade ago. Yes Airbus got cheap govt funding with great payback arrangements such that if not enough planes sold by a certain date- all govt loans would be forgiven. Yes BA ripped off WA state- Inslee. But when you are and have been amoung the top three or 5 exporters (($$$$$ ) in the U.S for long time – you tend to belive that whats good for BA is good for ( insert name of CEO ) here

    • Not disagreeing with your point, but AB loans *must* be paid back. This idea that they’re forgiven is FUD.

      • Most Airbus loans are paid back and for the sucessful A320 they payment never ends as Airbus has tried to say they pay it over and over. Other programs as the original A300 and A380’s most likely are part of the loans forgiven. So when adding the programs up it might be that the A320 and A330/A340 payments and Money per unit sold makes up for the laggards. The US benefit as well with Engine manufacturers Risk and Revenue sharing programs that forigien goverment uses “soft loans” to their Engine companies like IHI, Snecma, MTU, ITP … to pay the entry fee so they get into the engine programs and they pay back to thier government for each unit sold to GE/PWA/Honeywell.

        • No, sorry but you’re wrong. At the end of the seventeen year term, the A380 loan will be paid off in full whether or not they made the number of airframes set out in the conditions.

  3. How can Boeing claim a reversal is in their favor? They have previously been claiming a win so a reversal should be a loss!!
    More to the point it looks like the word actionable is still in play, so it looks to me to be a loss.

    • It looks to me like a mixed decision.
      I guess deciding who “won” or “loss” is predicated on who you are rooting for.

    • Yup.
      IMU the judgment review modifies gravity and not basic polarity ( murder to manslaughter so to speak 🙂

    • MartinA; the previous Boeing “wins” were for the majority of the claims Airbus had made. They had to wait for this one last action to clear them all. Meanwhile, Airbus had final decisions that mount up to huge losses for them, and they keep trying to duck the responsibility. I remember years ago Airbus saying that one of their plans was to keep Boeing in court (in order to confuse the public, I presume).

  4. Maybe Airbus should file an anti-dumping complaint against Boeing for dumping 787s into the European market at far less then it cost to manufacture them. This dumping clearly cost Airbus significant profits in A330 sales and wiped out the A340. If Boeing had sold those planes even at cost, there is NO WAY they would have sold remotely as many planes as they have booked and Airbus would have made billions in additional profits on A330 sales.

    • LOL!

      Yeah, hadn’t even thought about it that way – but this is way more true than the Bombardier dumping accusation…

    • The cost to manufacture is irrelevant, for it to be dumping Boeing would have had to sold those 787s for a cost lower in Europe than America.

  5. Judging from the lack of comments on this post I get the feeling that we as everyone else are becoming immune to the nonsense spouting by both sides. As I have said before this spat seems more to do with justifying each OEM in the eyes of domestic governments for both of them at both country and state level so that the coffers don’t run dry. Does anyone here believe that a cut and dried decision will result that involves either party giving monies back as I don’t.

    • Yep, as Scott has said no matter what the WTO decides their decisions have no real teeth when it comes to enforcement.

  6. The WTO only give legal permission to apply countervailing duties AFIK, they do not actually enforce law, just provide a legal framework for retaliation of unfair trade practices.

  7. I think we should turn the WTO loose on N. Korea!

    By the time they were done they would have no idea where S. Korea was.

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