Boeing soars to victory

American aircraft manufacturer Boeing has scored a major victory over Airbus and the European Union.

The World Trade Organization has reversed a ruling that stated that Boeing received illegal subsidies from the United States.

Background

Boeing is an American multinational corporation that is primarily known for designing, manufacturing and selling airplanes. It also manufactures rotorcrafts, rockets and satellites across the world.  It is the largest global aircraft manufacturers.

In 2013, the American government approved a $8.7 billion tax incentive program for Boeing. This meant that Boeing would be able to extend its already existing tax breaks from 2024 to 2040. This helped the company manufacture its newest aircraft, 777X. The European Union in 2014 filed a suit against this tax program. The international agency argued that this tax program was the same as a subsidy package – something that is forbidden by the World Trade Organization. Boeing suffered a massive defeat in November 2016, when the WTO ruled in EU’s favor.

This isn’t the first time America and the EU have fought over providing illegal subsidies to companies in their regions. The US has earlier claimed that Airbus receives illegal subsidies in Europe.

Analysis

The United States acted on behalf of Boeing and appealed this decision at WTO. It was able to secure an outright victory with the international body ruling in Boeing’s favor.

Boeing General Counsel J. Michael Luttig noted in a statement, “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. No further appeal of today's decision is available to the EU.”  

Luttig has also accused Airbus to have breached WTO rules adding “The latest of the false claims Airbus and its government sponsors have made has now been rejected by the WTO. The EU and Airbus, meanwhile, continue to be in flagrant breach of WTO rulings and must eliminate the massive illegal subsidies the WTO said a full year ago had not been addressed, or risk U.S. sanctions against European exports.”

Airbus, however, has noted that the issue is “far from over” as many other problems need to still be resolved.

Assessment

Our assessment is that while Boeing can claim victory over this ruling, it still has two other cases impending against it. This is one of the largest trade disputes in the world right now.