WTO confirms US failed to fully comply over Boeing subsidies

Geneva, Switzerland | AFP | The World Trade Organization confirmed Thursday that Washington failed to fully comply with a 2012 order to halt subsidies to Boeing, marking a partial victory for rival aircraft maker Airbus and the EU.

The ruling from the WTO appeals body was the latest blow in the decade-long clash between the titans of the civil aircraft industry, which has seen both Airbus and Boeing score points along the way.

The WTO ruled in March 2012 that billions of dollars of subsidies to Boeing were illegal and notified the United States to bring them to an end.

But just a few months later, the European Union filed a new complaint with the global trade body, alleging that Washington was not complying with that order.

In a ruling published in June 2017, the WTO said the US had brought 28 of 29 programmes into compliance, but agreed with Brussels that Washington had not taken “appropriate steps to remove the adverse effects or … withdraw the subsidy” in the case of Washington State.

Both the EU and the US appealed that finding to the WTO Appellate Body, which on Thursday basically toed the same line as the 2017 panel, although it appeared to take a harsher line against the American-side.

It found there were other subsidy programmes, including in South Carolina, which did not conform with the 2012 ruling, but in several of them it said it had been unable to complete the legal analysis to determine if the subsidies had an adverse effect on competitors’ sales.

Both the EU and the US claimed victory after the ruling landed.

In its own statement, Airbus described the ruling as a “major win” and warned that if without a settlement, the US “will face billions in countermeasures.”

Boeing meanwhile maintained that the WTO appeals body had “rejected every allegation of unlawful subsidies to Boeing with the single exception of one measure,” referring to Washington State.

“Boeing will support the United States and Washington State as they take steps necessary to fully comply with today’s ruling,” the company said.

“We trust that our example will prompt Airbus and the European Union to immediately bring themselves into full compliance with the substantial rulings against these parties by the WTO,” it added.

The EU has also been reprimanded by the WTO during the tit-for-tat conflict between Airbus and Boeing, and the US aircraft maker suggested last year that billions in sanctions might also be applied against the bloc.

The WTO, which aims to create a level playing field in global trade, does not have the ability to force compliance with its rulings, but can approve retaliatory measures which in theory can pressure trade manipulators to fall into line.