WTO says tax breaks for Boeing are illegal

GENEVA (AP) — U.S. plane maker Boeing received major illegal tax benefits from Washington state, a world trade body ruled Monday, adding that the federal government should now take action to end that support.

Boeing and the European Union — which backs Boeing’s key European rival, Airbus — each claimed the World Trade Organization ruling was a victory. The two aerospace giants have long battled for contracts.

The WTO found that the support Washington state promised to give Chicago-based Boeing from 2024 to 2040 amounted to prohibited subsidies. The support offered by Washington state came on condition that Boeing keep 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 28-member WTO said it 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 by WTO.

The ruling is part of a wider squabble involving accusations between the U.S. government and the 28-nation EU over support for Boeing and Airbus dating to 2004.

EU Trade Commissioner Cecilia Malmstrom called Monday’s ruling “an important victory for the EU and its aircraft industry. We expect the U.S. to respect the rules, uphold fair competition and withdraw these subsidies without any delay.”

For its part, Boeing said it expected the European bloc and Airbus to appeal the ruling, saying the World Trade Organization had found that Boeing 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,” said Boeing general council J. Michael Luttig.

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