Boeing received illegal tax breaks from Washington state, WTO rules
WTO: Boeing received illegal tax breaks
U.S. plane maker Boeing received major illegal tax breaks from Washington state, a world trade body ruled Monday, adding that the federal government should take action to end that support within months.
The Chicago-based company and the European Union, which backs Boeing’s key European rival Airbus, both claimed the ruling by the World Trade Organization as a victory in a long-standing battle for contracts between the two aerospace giants.
The WTO found that the support Washington state promised to give Boeing from 2024 to 2040 amounted to “prohibited” subsidies. The support offered by Washington came on the condition that Boeing keeps the production of the wings for the wide-bodied 777X plane in the state, effectively excluding foreign competition. Boeing has extensive plants around Seattle.
The E.U. said the WTO had ruled that $5.7 billion in subsidies were illegal, out of a total $8.7 billion in measures that it reviewed. But Boeing called that figure excessive and said only “future incentives” of $50 million a year were found impermissible in the WTO decision.
Appearing to counter both, a Geneva-based trade official, speaking on condition of anonymity because he was not authorized to speak publicly about the matter, said the ruling addressed only the legality of the measures and not the possible financial benefit that could be drawn from the subsidy.
The ruling is a part of a wider squabble involving accusations between the U.S. government and the 28-nation E.U. over support for Boeing and Airbus dating back to 2004.
E.U. Trade Commissioner Cecilia Malmstrom called Monday’s ruling “an important victory for the E.U. and its aircraft industry.”
“We expect the U.S. to respect the rules, uphold fair competition, and withdraw these subsidies without any delay,” Malmstrom said in a statement.
For its part, Boeing said it expected the European bloc and Airbus to appeal the ruling, saying the WTO had found that the U.S. company had not received any benefit yet from the 777X tax rate and wouldn’t until the plane is first delivered in 2020.
“Today’s decision is a complete victory for the United States, Washington State and Boeing,” Boeing general council J. Michael Luttig said in a statement. “In rejecting virtually every claim made by the E.U. in this case, the WTO found today that Boeing has not received a penny of impermissible subsidies.”
— Associated Press
OECD raises forecast for global growth
The Organization for Economic Cooperation and Development lifted its global growth forecasts for 2017 and predicted expansion in 2018 will reach its fastest pace in half a decade as President-elect Donald Trump’s planned fiscal stimulus will provide a boost to major economies.
World gross domestic product will now expand 3.3 percent next year, up by 0.1 percentage point from September’s forecast, the OECD said in a semiannual report. The Paris-based organization sees the global economy expanding 3.6 percent in 2018, the fastest pace since 2011.
The S&P 500 Index has risen to a record high and bond yields have increased since Trump won the U.S. presidential election on Nov. 8. Trump’s promises of spending on infrastructure as well as tax cuts should lift U.S. demand, spurring investment and boosting overall output once he takes office in January, increases that should also spill over into the rest of the world, according to the OECD.
Forecasts increased for all major economies in 2017.
The United States will grow 2.3 percent in 2017 and 3 percent in 2018, while the euro area will expand 1.6 percent and 1.7 percent, respectively, the OECD predicted. Growth will now be 6.4 percent and 6.1 percent in China and 1 percent and 0.8 percent in Japan, it said.
— Bloomberg News
Also in Business
● Deutsche Lufthansa AG lost a German court bid to prevent pilots from resuming strikes Tuesday in a labor dispute that has caused almost 4,500 flight cancellations this month. The Munich Labor Court denied the airline’s request for an injunction preventing the two-day walkout at the mainline Lufthansa brand, putting the pilots on track for their longest-ever work stoppage at the carrier. The company is appealing, according to a court statement.
— Bloomberg News
● 8:30 a.m.: Commerce Department releases third-quarter gross domestic product.
● 9 a.m.: Standard & Poor’s releases S&P/Case-Shiller index of home prices for September and the third quarter.
● 10 a.m.: The Conference Board releases the Consumer Confidence Index for November.
— From news services