Boeing subsidy case: World Trade Organization confirms EU right to retaliate against US

The World Trade Organization (WTO) allowed the EU to raise tariffs up to $4 billion worth of imports from the U.S. as a countermeasure for illegal subsidies to the American aircraft maker, Boeing. The decision builds upon the WTO’s earlier findings recognising the U.S. subsidies to Boeing as illegal under the WTO law.

In March 2019, the Appellate Body, the highest WTO instance, confirmed that the U.S. had not taken appropriate action to comply with WTO rules on subsidies, despite the previous rulings. Instead, it continued its illegal support of its aircraft manufacturer Boeing to the detriment of Airbus, the European aerospace industry and its many workers. In its ruling, the Appellate Body:

  • confirmed the Washington State tax programme continues to be a central part of the U.S. unlawful subsidisation of Boeing;

  • found that a number of ongoing instruments, including certain NASA and U.S. Department of Defence procurement contracts constitute subsidies that may cause economic harm to Airbus;

  • confirmed that Boeing continues to benefit from an illegal U.S. tax concession that supports exports (the Foreign Sales Corporation and Extraterritorial Income Exclusion).

The decision confirming the EU right to retaliate stems directly from that previous decision.

In a parallel case on Airbus, the WTO allowed the United States in October 2019 to take countermeasures against European exports worth up to $7.5 billion. This award was based on an Appellate Body decision of 2018 that had found that the EU and its Member States had not fully complied with the previous WTO rulings with regard to Repayable Launch Investment for the A350 and A380 programmes.

The U.S. imposed these additional tariffs on 18 October 2019. The EU Member States concerned have taken in the meantime all necessary steps to ensure full compliance.

For More Information subscribe and download the following:

  • WTO Appellate Body ruling on US subsidies to Boeing

  • Public consultation on preliminary list of products in the Boeing case

  • Preliminary list of products

  • History of Boeing case

  • History of Airbus case

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