WTO upholds ruling on Boeing's US subsidies

An appellate body from the Geneva-based World Trade Organization (WTO) on Monday circulated its report on the long-running transatlantic civil-aircraft dispute, largely upholding last March's findings by the panel that the U.S. has illegally subsided Boeing with billions of dollars.

The Appellate Body report, which came almost one year after both the European Union (EU) and the U.S. submitted appeal for further WTO scrutiny over the case, maintained a majority of the panel rulings which had determined that the value of the subsidies to be at least 5.3 billion U.S. dollars between 1989 and 2006.

In addition, Appellate Body report also went on further than the panel rulings by saying that the subsidies granted to Boeing by the City of Wichita (Kansas) also violate WTO rules.

Meanwhile, several items from the panel's findings, including its analysis of price effects, were reversed by the appeals report.

According to WTO rules, the appeals report will be formally adopted by the Appellate Body within 30 days, unless rejected by consensus, which experts say is almost impossible.

Both the EU and the U.S. immediately responded after the report came out.

EU Trade Commissioner Karel De Gucht hailed the Appellate Body report as a victory by the EU side.

"Today's ruling vindicates the EU's long-held claims that Boeing has received massive U.S. government hand-outs in the past and continues to do so today," he said, claiming these "long-term subsides" has cost the EU industry billions of Euros.

"This landmark ruling clearly shows the U.S. has used an unlawful way of supporting business that has stood in the way of fair competition," De Gucht said, urging the U.S. to put an end to "such harmful subsidies".

De Gucht's counterpart, U.S. Trade Representative Ron Kirk also claims victory over the case, given that in a separate WTO lawsuit filed by the U.S. against the EU, the Appellate Body found that the EU had given Airbus 18 billion dollars in subsidized funding, dwarfing that of the U.S. to Boeing.

"This decision is a tremendous victory for American manufacturers and workers -- and demonstrates the Obama Administration's commitment to ensuring a level playing field for Americans," the U.S. trade representative said.

Kirk accused European subsidies to Airbus being "far larger -- by multiples -- and far more distortive than anything that the United States does for Boeing."

"The United States is ready to address all of the WTO findings, and we expect Europe to do the same," he added.

Boeing and Airbus have accused each other of receiving subsidies from their own governments for years.

On Jan. 20, 2006, the EU requested WTO to establishment a panel to probe into alleged U.S. subsidies through tax and non-tax incentives by various municipalities to its largest aircraft maker Boeing.

NASA, Department of Defense, Department of Commerce were also accused of giving Boeing unfair advantage by payments and access to government facilities, equipment and employees, or allowing Boeing to make use of government R&D programs and intellectual properties.

According to EU estimation, the total amount of the alleged U.S. government subsidies between 1989 and 2006 was 19.1 billion dollars.

The panel report over the case came out on March 31, 2011, however, both the EU and the U.S. later on decided to appeal to the Appellate Body.