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WTO panel says Boeing received banned U.S. subsidies

The panel cites $5.3 billion in state and federal government funding for the 787 Dreamliner program.

March 31, 2011|By Julie Johnsson

Boeing Co. got a $5.3-billion boost from banned state and federal government subsidies to develop its 787 Dreamliner and other commercial aircraft, a World Trade Organization panel found.

The ruling Thursday was hailed by the European Commission and helped even the score in the messy and long-running trade dispute between the United States and the European Union over government funding of airliner development, a major source of exports on both continents.

U.S. officials also were upbeat because only half the aid questioned by the WTO, or $2.7 billion, was deemed impermissible, meaning it will eventually have to be withdrawn or otherwise remedied. In a separate ruling last year, the WTO determined that Boeing rival Airbus had received about $20 billion in prohibited subsidies from four European governments.

"The World Trade Organization has vindicated the U.S. and the position we've taken for the last 20 years, that subsidies the Europeans have given to Airbus dwarf anything the U.S. has given to Boeing," U.S. Trade Representative Ron Kirk said of Thursday's ruling.

The federal government already had eliminated export-related tax breaks that accounted for $2.2 billion of the Boeing total. Included in the amount deemed permissible by the WTO panel were incentives provided by the states of Illinois and Kansas, permissible because they didn't harm Airbus.

But analysts weren't certain when, if ever, the dueling sides would address the prohibited incentives singled out by WTO judges. The findings could be overturned or whittled down as the cases wind through the WTO dispute settlement process. And the threat China poses to the Boeing-Airbus large-aircraft duopoly also could spur the two sides to hammer out a new trade deal.

jjohnsson@tribune.com

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