Rightways to Success: Boeing subsidies should be withdrawn says WTO

Wednesday, 15 September 2010

Boeing subsidies should be withdrawn says WTO

Boeing has always said that all US support was above board

The World Trade Organization (WTO) has ordered more than $20bn (£13bn) in US government subsidies should be withdrawn from Boeing, according to agency reports.

A confidential interim report released on Wednesday is said to back European complaints over $17bn in research contracts from Nasa and the Pentagon.

Another $4bn tax breaks came from Washington state.
The US says there are a "number of inaccuracies" in press reports.

Nefeterius McPherson, a spokeswoman for the US Trade Representative' s Office told the BBC: "The report is confidential, so I can't speak about the contents."

The WTO report on Boeing was prompted by complaints from the European Union, which argued that Boeing was being given support that was anti-competitive.

European Trade Commissioner Karel De Gucht said the report backed the EU's case: "Some of the findings of the WTO Panel Report on subsidies to Boeing have already been leaked and commented upon. I would like to limit myself to saying that the analysis conducted appeared very thorough and its conclusions support the EU's view."

The EU has itself fallen foul of the WTO.

Earlier this year, the organisation ruled that the EU paid illegal subsidies to the European firm, EADS, the parent company of Boeing's arch-rival Airbus.

The acrimonious tit-for-tat spat has dragged on for almost six years. Brussels brought its case to the WTO in October 2004 - on the same day that Washington complained about EU subsidies to Airbus.

Aerospace and Defence

Wednesday's WTO report is said to have found the Boeing aid "actionable" and has called for it to be withdrawn but has stopped short of labelling the state incentives "prohibited," which would require faster remedies, according to sources.

The EU is appealing against the earlier decision by the WTO that it itself was guilty of giving EADS illegal subsidies in the form of support for the A380 plane.

It added that it would also contest the ruling that there had been a causal link between support to Airbus and adverse effects to Boeing.

Truce?

Some analysts have said that such an agreement would be in the best interests of both companies - allowing them to focus instead on developing their aircraft.

Earlier, an Airbus spokeswoman said the two rivals may negotiate a settlement.

Mr De Gucht said more time was needed to absorb the WTO's report, but that he believed "even more strongly than before that the question of subsidies to aircraft manufacturers can be settled only by way of negotiations".

Ms McPherson said the US had been happy to hold talks for some years: "We were interested six years ago. We were interested four years ago. We were interested two years ago. And we're still interested."

Violation claim

The EU complaint accused Washington of funnelling subsidies to civil aviation through military research funds.
Boeing, the maker of the long-delayed 787 Dreamliner, insisted that all US support was above board.

In a statement ahead of the WTO's preliminary decision, it said none of Washington's actions had "the market-distorting impact of launch aid nor even approach the sheer scale of European subsidy practices".