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WTO Appellate Body Rejects EU Allegations of Prohibited Subsidies to Boeing In Latest Win for the United States, WTO Appellate Body Rejects EU Prohibited Subsidy Case

Washington, D.C. – The World Trade Organization (WTO) today issued an Appellate Body report rejecting the case brought by the European Union (EU) alleging that the United States provided so-called “prohibited” subsidies to Boeing.  The EU challenged seven Washington State tax measures, alleging that they were contingent on Boeing’s use of domestic fuselages and wings instead of imported fuselages and wings.  The Appellate Body disagreed, giving the United States a complete victory in this dispute.

This finding comes on the heels of a WTO compliance panel finding in June in a separate dispute that 28 of 29 U.S. programs challenged by the EU were consistent with WTO rules.  In that dispute, the compliance panel found that only a single Washington State tax program has limited effects contrary to WTO rules. That panel’s findings are now on appeal before the Appellate Body.

These findings in the two aircraft cases brought by the EU are in sharp contrast to the findings of a different compliance panel in a dispute brought by the United States challenging the EU’s “launch aid” and other subsidies to Airbus.  In September 2016, that WTO compliance panel found that the EU had failed to achieve compliance with its WTO obligations, and had further breached WTO rules by giving Airbus billions of dollars in additional subsidies.  The EU subsidies appear to cause tens of billions of dollars in harm to Boeing. 

“European governments have provided billions of dollars in illegal subsidies to Airbus for years, yet they have tried and failed to create a false equivalence with the United States and Boeing.” said U.S. Trade Representative Robert Lighthizer.  “Just as the EU lost on nearly all claims against the United States in June 2017, today’s WTO report further confirms that the EU cannot justify their own illegal subsidies by hiding behind groundless claims against the U.S.  The EU should immediately come to the table on a solution that will end all its WTO-inconsistent subsidies.”

Background

After many years of seeking unsuccessfully to convince the EU and four of its member States (France, Germany, Spain, and the United Kingdom) to cease its subsidization of Airbus, in 2004 the United States brought a WTO challenge to EU subsidies.  The EU responded by challenging what it claimed were even larger subsidies to Boeing by the United States.  Then, in 2014, the EU launched a second case against the United States, alleging that certain Washington tax measures were contingent on Boeing’s use of domestic fuselages and wings, in breach of the WTO’s prohibited subsidies provisions.

Today’s report is with respect to that 2014 case and ends that dispute with a complete victory for the United States. 

With respect to the two prior, long-standing disputes, two separate WTO panels addressed the claims brought by the United States and the EU, respectively. The two processes resulted in two very different sets of WTO findings and subsequent respondent actions. Click here to read more about these disputes.

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