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WTO says U.S. failed to halt state tax subsidy for Boeing

WTO says U.S. failed to halt state tax subsidy for Boeing
FILE PHOTO: An aerial photo shows Boeing airplanes, many of which are grounded 737 MAX aircraft, at Boeing Field in Seattle, Washington, U.S. March 21, 2019. REUTERS/Lindsey Wasson   -   Copyright  LINDSEY WASSON(Reuters)
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GENEVA/PARIS (Reuters) – The World Trade Organisation said on Thursday the United States had ignored a request to halt subsidised tax breaks to Boeing in its main planemaking state of Washington as a 15-year-old transatlantic trade row edges towards tit-for-tat sanctions.

The European Union said the WTO appeal ruling had vindicated its claims that Boeing continued to receive illegal subsidies, but the United States said only one measure, a Washington state tax break worth around $100 million annually, had been found to violate the rules.

The United States and EU have been battling since 2004 over mutual claims of illegal aid to plane giants Boeing and Airbus, with parallel cases generating thousands of pages of findings and years of litigation that put a burden on the already congested WTO.

Both sides have been caught paying billions of dollars of subsidies to gain advantage in the global jet business, and asked to stop or face potential sanctions. Thursday’s appeal ruling showed that the United States did not stop all subsidies when asked to do so, echoing an earlier finding against the EU.

The WTO’s Appellate Body, effectively the supreme court of world trade, ruled that the business and occupancy (B&O) tax rate reduction in Washington state had significantly cut Airbus sales in five particularly price-sensitive sales campaigns.

“The Appellate Body has now settled this case definitively, confirming our view the US has continued to subsidise Boeing despite WTO rulings to the contrary,” European Trade Commissioner Cecilia Malmstrom said in a statement.

The U.S. Trade Representative’s office called the ruling “a major win for the United States”, since it had found only one illegal subsidy remaining after it had complied with earlier rulings. Boeing said it would support the new decision.

Any sanctions could broadly target industries beyond aerospace, but the impact of the record trade dispute on Boeing and Airbus themselves has so far been modest.

Analysts have long predicted the case would peter out or be settled without a trade war, but the prospect of retaliation is grabbing more attention than before amid global trade tensions.

(Reporting by Tom Miles and Tim Hepher, editing by Stephanie Nebehay)

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