EU Opens a New WTO Dispute against U.S. over Boeing Subsidies

Written by | Thursday, December 25th, 2014

The European Union launched a new trade dispute at the World Trade Organization due to the American subsidies for the Boeing Company. Brussels says that the United States was giving “millions of dollars” in unjust subsidies to help Boeing construct its new 777X jet. The Boeing Company is a multinational corporation that designs, produces, and sells airplanes, rockets, satellites, and rotorcrafts. It is among the largest aircraft producers and the second biggest defense contractor in the world.

According to Brussels, the United States was breaking WTO rules by providing the Boeing with tax incentives to ensure that it will develop, construct and sell 777X jet in the State of Washington. The 777X is a new model in the series of 777 Boeings that will feature new engines, new composite wings, and technologies from Boeing 787. It is scheduled to be launched in 2020 but the company has already received millions in advanced orders.

Brussels launched a request for consultations in response to the decision of Washington State in November last year to extend subsidies to Boeing, which were originally granted only between 2024 and 2040. The EU, however, thinks that the broadened subsidies are against WTO rules “because they require the beneficiary to use domestic goods rather than imported ones”. The EU Commission explained in an official statement that “the subsidies scheme extension is estimated to be worth $8.7 billion (7.1 billion euros) and will be the largest subsidy for the civil aerospace industry in U.S. history.”

This dispute is not the first between the EU and the U.S. over subsidies in the aircraft industry. Brussels and Washington have already been in multiple WTO dispute settlements in the past ten years over the issues of government subsidies to Boeing and its European competitor Airbus. The EU’s request for consultations is the first step in a dispute within the WTO’s Dispute Settlement System. The United States now has ten days to respond but due to the holiday season, Washington has time until January 7.

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