Illegal state aid? Key WTO ruling favors Boeing on 777X

Associated Press

GENEVA — Boeing notched a key victory in a years-long legal case against its European rival, Airbus, after an international body rejected the European Union’s claims that Washington state was giving Boeing illegal tax incentives.

Chicago-based Boeing Co. trumpeted a “resounding defeat” for the EU in the dispute, one of three involving the company against Airbus. Boeing also insisted the European bloc faces a rising risk of sanctions “as Airbus continues to ignore rulings against its illegal practices.”

Monday’s decision by the World Trade Organization’s appellate body reverses a ruling by a lower WTO panel in November that said that Washington state — which is home to much of Boeing’s plane manufacturing operations — had provided prohibited subsidies through a tax incentive for production of the Boeing 777X.

The panel also called on the U.S. government to take action to end the support. The U.S. had appealed the panel’s decision in December.

Monday’s ruling, which is final, found that none of the tax incentives provided by Washington state were illegal. The decision now goes to the WTO’s dispute settlement body for formal adoption within 20 days.

“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,” Boeing general counsel Michael Luttig said in a statement.

“This was a sweeping and clean win for the United States,” he said.

Airbus, for its part, turned its attention to one of the other outstanding disputes involving the two rivals, insisting that WTO has ruled in a separate case that Boeing is receiving subsidies that are “illegal and actionable” and “causing massive harm to Airbus.”

“The ‘game’ is far from over,” said Rainer Ohler, Airbus’ executive vice president for communications.