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Boeing received illegal subsidies – WTO

written by australianaviation.com.au | April 1, 2011
A 787 with Mt Rainier in the background.

The World Trade Organisation (WTO) has found Boeing received billions of dollars worth of illegal government subsidies to fund its commercial aircraft line, according to a report published on March 31.

The WTO has found that Boeing received US$5.3 billion in illegal government subsidies to develop and build new aircraft, the most prominent of which being the company’s new 787.

The WTO’s final report was in response to complaints made by the European Union on June 27 2005, which alleged that between 1989 and 2006, Boeing received almost $24 billion in illegal subsidies.

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However, Boeing has disputed even the US$5.3 billion figure  saying that the WTO found no more than US$2.7 billion of “impermissible subsidies”, including $2.6 billion for NASA R&D funding. The company also took a swipe at Airbus, accusing the European manufacturer of receiving over US$20 billion in illegal government subsidies, while Airbus accused Boeing’s illegal subsidies of causing a loss of $45 billion in potential sales.

The WTO found Airbus had received $15 billion of illegal subsidies in a ruling announced in June last year, which had seen the company benefit from favourable European government loans at below-market interest to develop the A380. Airbus has since appealed the WTO’s ruling, with a decision on that appeal to made sometime in April.

Both Airbus and Boeing have issued press statements claiming victory in the WTO’s ruling, accusing each other of benefiting from billions of dollars in illegal government subsidies.

“This WTO ruling shatters the convenient myth that European governments must illegally subsidise Airbus to counter US government assistance to Boeing,” said J. Michael Luttig, Boeing executive vice president and general counsel.  “The ruling rejects 80 per cent of the EU’s claims against the US, finding no more than $2.7 billion of impermissible subsidies to Boeing not previously remedied. That amount includes $2.6 billion in NASA R&D funding, which is but a small fraction of the total amount challenged.”

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Meanwhile,“Finally the truth emerges: Boeing has received and continues to receive subsidies which have a significantly greater distortive effect than the Reimbursable Loans to Airbus,” said Rainer Ohler, Airbus’s head of public affairs and communications. “Taking the cases together, the WTO has now specifically green-lighted the continued use of government loans in Europe and ordered Boeing to end its illegal cash support from US taxpayers. It’s time for Boeing to stop denying or minimising the massive illegal subsidies it gets.”

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