Boeing scores decisive victory over Airbus

Boeing Celebrates WTO Decision as US Victory

Boeing viewed the WTO's verdict as a triumph for its European rival Airbus and the EU itself.

"This is a decisive and clear victory for the United States," said Boeing General Counsel J. Michael Luttig.

At the heart of the case lies Boeing's tax incentive program valued at $8.7 billion, approved by Washington in 2013. The program, which extends existing tax incentives from 2024 to 2040, also played a role in Boeing's decision to assemble its 777X jets in the state. In 2014, the EU filed a lawsuit alleging that the tax reduction program was a prohibited subsidy under WTO regulations. The WTO ruled in favor of the EU in November 2020.

The EU and US have been locked in a legal battle over alleged illegal subsidies to both corporations for years. In 2004, the US accused Airbus of receiving illegal subsidies from European governments. The EU retaliated in 2005 by filing a lawsuit alleging that Boeing and federal programs resembled similar illegal subsidies.

Boeing has accused Airbus and the EU of diverting attention from their own violations by focusing on the Washington Subsidy case.

"The WTO has once again dismissed an unfounded EU charge," Luttig said. "This step is an attempt to divert attention from the 22 billion USD in subsidies the European governments provided to Airbus, which the WTO declared illegal." Meanwhile, Airbus continues to egregiously violate the WTO ruling.

Airbus vowed to continue its legal battle against Boeing.

"Boeing's illegal subsidies remain illegal and must be abolished," said Rainer Oler, Executive Vice President of Airbus Communications. "The game is far from over."

Contribution by CNNMoney's Jon Ostrower.

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The extension of Boeing's tax incentive program has influenced its decision to assemble the 777X jets in the state. However, despite the WTO's ruling against its tax incentive program, Boeing steadfastly defends its business practices.

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Additional Information:

The WTO ruling regarding Boeing's tax incentive program is part of a broader dispute over subsidies between Boeing and Airbus. Here are some key points:

WTO Ruling: In 2012, the WTO ruled that Boeing had received at least $5.3 billion in illegal cash subsidies and an additional $2 billion in state and local subsidies, which were deemed illegal. Boeing was given six months to modify the way government support for Boeing was handled to comply with WTO rules.
EU Countermeasures: In response to the alleged non-compliance with the WTO ruling, the EU sought permission to impose trade sanctions of up to $12 billion annually against the US, which the WTO approved in 2016. The tariffs were implemented in stages, with the US imposing tariffs on Airbus and other EU goods in 2019, and the EU retaliating with tariffs on US goods in 2020.
Tariff Implementation: In October 2019, the US imposed tariffs on $7.5 billion worth of EU goods. The EU retaliated with tariffs on $4.1 billion worth of US goods in October 2020. This dispute resolution process included both sides engaging in negotiations to resolve the issue.
Settlement Efforts: In 2021, the US and EU reached a truce, suspending tariffs for five years. The agreement included a commitment to transparently fund future research and development without favoring domestic producers.

Boeing and Airbus have responded differently to these rulings and countermeasures:

Boeing's Response: Boeing has defended its tax incentives, arguing that they are available to any company that meets specific criteria, such as manufacturing aircraft wings and performing final assembly in the state. Boeing has also requested that Washington State suspend its preferential business-and-occupation tax rate to reduce the threat of retaliatory tariffs.
Airbus's Response: Airbus has argued that Boeing's tax incentives constitute illegal subsidies, particularly the $8.7 billion incentive package for the 777X project. Airbus has claimed that this support amounts to a publicly funded free aircraft program for Boeing, which is against WTO rules.
Negotiations and Settlements: Both companies have engaged in negotiations to resolve the dispute. The WTO-mediated consultations and the eventual settlement in 2021 reflect ongoing efforts to find a mutually acceptable solution to the subsidy disputes.