|WTO to Rule Boeing $24bn Subsidies Illegal|
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The World Trade Organisation is expected to rule on September 15 that huge subsidies paid to Boeing since the early 1990s are illegal, equalising the score in the epic legal fight between the US planemaker and Europe’s Airbus.
The EU complaint alleges that Boeing received $24bn (£15.5bn) in illicit aid, including $16bn in grants from the NASA space agency, as well as $2.1bn of export tax discounts through Foreign Sales Corporations (FSC), and subsidies from the Pentagon.
Experts say the WTO has already ruled seven times that Washington’s use of FSC is an illegal form of subsidy, and is certain to do this time in its 1,500-page report.
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. The WTO cannot issue legally binding decisions. While there is a sanctions provision, governments are loathe to use it.
Yet it will almost certainly be moral relief for Airbus after suffering its own rebuff in June. Then the WTO said the EU had breached trade law by providing development loans to Airbus for the A380 superjumbo and other aircraft at below market rates - though it found that Europe’s use of government loans was allowable mechanism.
Lord Mandelson, a former EU trade commissioner, said the EU had entered the fray in 2005 in the face of “legal trench warfare” by Boeing.
Brussels suspected that Boeing was trying to use the WTO machinery to halt Airbus’s advance in the US market.
He said the dispute had become sterile, benefiting lawyers. Rather than continuing this pointless feud, the US and Europe need to find a way to sit down and negotiate,” he said.
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Published on our website on Sept.16, 2010