Boeing subsidies 'illegal' - WTO

The European Union has claimed victory in its long-running dispute with Boeing after a World Trade Organisation panel partly upheld its complaint that the American aerospace giant received billions of dollars in unfair subsidies from the United States government.

The panel concluded that Boeing benefited from $5.3bn of payments between 1989 and 2006 that were illegal under WTO rules. The case began in 2004 when the US government made a similar accusation that Boeing's European rival Airbus had itself received illegal subsidies. In June 2010 the WTO upheld 80 per cent of that claim, finding that Airbus had received more than $20bn in illegal payments.

Reacting to today's decision, the EU's Trade Commissioner Karl de Grucht said: "These subsidies have resulted in substantial harm to EU interests, causing Airbus to lose sales, depress its aircraft prices and unfairly lose market share to Boeing. The detrimental costs to EU industry from this lengthy and onerous subsidisation run into billions of euro. We therefore welcome the WTO panel's report and call on the US government to take the appropriate steps that may assist to achieve a mutually agreed solution to this dispute."

In a statement the EU said: "These massive subsidies from multiple US government sources have enabled Boeing to develop new aircraft, and in particular the 787 Dreamliner, at much lower cost than would otherwise have been the case." And Airbus' head of public affairs and communications Rainer Ohler said: "Finally the truth emerges. It's time for Boeing to stop denying or minimizing the massive illegal subsidies it gets."

But in its own statement Boeing said the ruling rejected nearly 80 per cent of the EU's claims and "finds no US equivalent for billions in illegal European launch aid provided to Airbus".

The company's executive vice-president and general counsel J. Michael Luttig said: "This WTO ruling shatters the convenient myth that European governments must illegally subsidize Airbus to counter US government assistance to Boeing. The ruling rejects 80 per cent of the EU's claims against the US, finding no more than $2.7bn of impermissible subsidies to Boeing not previously remedied. That amount includes $2.6bn in NASA research and development funding, which is but a small fraction of the total amount challenged."

He added: "Comparing today's decision with the decision last June reveals a market distorted by Airbus' practices, with illegal launch aid being the key discriminator." The EU has said it will appeal some technical aspects of the ruling.