REPUBLIKA.CO.ID, BRUSSELS -- The European Union (EU) on Monday hailed its "major win" in a landmark trade ruling, as the World Trade Organization (WTO) said subsidies given by the government of the United States to Boeing are "illegal".
The United States' massive support for production of the Boeing 777X is in breach of international trade rules, according to Monday's WTO panel report. "Today's WTO ruling is an important victory for the EU and its aircraft industry," EU Trade Commissioner Cecilia Malmstrom said shortly after the ruling.
The WTO confirmed that the U.S. 2013 decision to extend tax breaks for Boeing until the year 2040 goes against previous WTO rulings. By making these tax breaks depend on the use of domestically produced wings, the United States also discriminated against foreign suppliers.
The United States has been given 90 days to drop the special tax exemption Boeing, according to the WTO panel report. "We expect the U.S. to respect the rules, uphold fair competition, and withdraw these subsidies without any delay," Malmstrom added.
This is the second ruling concerning the U.S. subsidies to Boeing. According to the statement released by the European Commission, the American measures which were ruled as illegal under this case alone amount to 5.7 billion U.S. dollars.
The ruling was made by the WTO after investigating a complaint from the EU. Since more than a decade ago, the American giant aerospace company Boeing and its European rival Airbus have been in a trade battle, in which each company accuses the other of taking billions of illegal state aid.
This is the first time in the history of Airbus/Boeing litigation that a WTO panel finds that one of the disputing parties has granted such outright prohibited subsidies that discriminate against foreign producers, the EU statement said. In the spring of 2017, the WTO is expected to issue a report on another long-standing case, which will confirm the extent of the U.S. WTO-incompatible subsidies to Boeing.
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