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WTO set to rule against $24bn “illegal” Boeing subsides

WTO set to rule against $24bn “illegal” Boeing subsides

The World Trade Organization is expected to rule today that huge subsidies paid to Boeing since the early 1990s are illegal.

The long-awaited ruling comes a year after the WTO issued a similar ruling which condemned Brussels for providing subsidies to Airbus.

Diplomatic sources said that the WTO’s decision on Wednesday is likely to redress the balance in the bitter dispute between the two aerospace giants.

“This report should rebalance the situation,” an unnamed told the AFP.

Brussels had brought the case to the WTO on 6 October 2004, on the same day Washington had complaint against EU subsidies to Airbus. It was therefore frustrated with the time lag between the rulings on the two cases.


The EU complaint accuses Washington of breaching international trade rules by funnelling subsidies to civil aviation through military research funds.

About $24bn of illicit subsidies were masked as defence research, Brussels claimed. This includes $16bn in grants from the NASA space agency, $2.1bn of export tax discounts, as well as subsidies from the Pentagon.

Under WTO rules, the interim ruling is meant to be held confidential until the global trade body publishes the full report by its panel of dispute settlement arbitrators.

The panel is also likely to condemn up to $5.7bn in aid for the new 787 Dreamliner, arguably the most subsidised passenger jet in history.

The ruling is largely symbolic as the WTO cannot issue legally binding decisions.

Prior to the decision, Boeing released a statement, saying: “In June, the WTO held in a case against the EU that Airbus had received illegal subsidies totalling more than $20 billion in principle. Launch aid, which represented the lion’s share of the involved illegal aid (roughly $15 billion), is unique to Airbus, unparalleled within U.S. industry, and – as the WTO has confirmed – harmful to U.S. aerospace interests and the American worker.

“To date, Airbus and its government sponsors have defiantly resisted abandoning launch aid. Media reports indicate that plans remain in place to provide billions of Euros of launch aid for the A350, a product that will compete with the Boeing 777 and 787. Unless that money is provided on full commercial terms, that would be an incomprehensible step in light of the recent ruling against launch aid and the outstanding obligation under WTO rules that Airbus repay the $4 billion in illegal launch aid it received for the A380, or restructure the A380’s financing to proven commercial terms.”