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World Trade Organization finds Boeing guilty of receiving illegal subsidies

But the amount of the illegal subsidies cited was a fraction of the amount reported in a WTO ruling last year against Airbus, Boeing's main competitor.

January 31, 2011|By Dominic Gates

Reporting from Seattle —

Confirming preliminary reports from September, a World Trade Organization ruling released Monday found Boeing Co. guilty of receiving illegal subsidies.

But the amount of the illegal subsidies cited was a fraction of the amount reported in a parallel WTO ruling last year against Airbus, Boeing's main competitor.

"The United States is confident that the WTO will confirm the U.S. view that European subsidies to Airbus dwarf any subsidies that the United States provided to Boeing," U.S. Trade Representative spokeswoman Nefeterius McPherson said.

The report was released only to the U.S. government and the European Union, and it won't be available to the public for two to three months, until it is translated into French and Spanish.

Airbus, however, issued a statement that said the report showed that Boeing received "at least $5 billion" in illegal subsidies. Airbus said the ruling, when made public, would show that without those illegal subsidies, "Boeing would not have been able to launch the 787."

If confirmed, that allegation about the funding of the 787 Dreamliner, Boeing's new jet, is certainly serious.

But in comparison, the final public WTO report issued last year on the subsidies to Airbus was a broader indictment. That ruling found the $15 billion paid in advance to fund the development phase of all of Airbus' jet programs, plus $5 billion in other subsidies, to be illegal.

Furthermore, sources on the U.S. side of the case said in September that about 40% of the $5-billion figure for Boeing subsidies pertained to a U.S. tax law that has already been changed. Boeing considers this portion of the WTO finding to be remedied.

If that is confirmed when the final report is publicly released, it would leave just $3 billion in illegal subsidies that Boeing must answer for, versus $20 billion for Airbus' parent, the European Aeronautic Defense & Space Co.

In a statement, Chicago-based Boeing called the conclusions of the WTO report "a sweeping rejection of the EU's claims." The EU had alleged that Boeing received some $24 billion in illegal subsidies.

Airbus took an opposite view. In a statement, it declared the WTO ruling an "excellent result."

In addition to the $5 billion in illegal subsidies received by Boeing, Airbus said the WTO report pointed to "more than $2 billion in state and local subsidies that Boeing will receive in the future" that are also illegal.

This is a reference to tax breaks and other incentives to Boeing from the states of Washington and Kansas, which will benefit Boeing through 2024.

Gates writes for the Seattle Times/McClatchy.

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