CNN Money: U.S. and EU claim victory in Boeing subsidy case

Mar 12, 2012

CNN Money: U.S. and EU claim victory in Boeing subsidy case

By Ben Rooney
March 12, 2012

NEW YORK (CNNMoney) -- The World Trade Organization issued a ruling Monday to settle a dispute between the European Union and United States over subsidies received by Boeing. Officials on both sides of the Atlantic quickly sought to portray the decision as a victory for their domestic airline industries.

"This decision is a tremendous victory for American manufacturers and workers," said U.S. Trade Representative Ron Kirk in a statement

In 2004, EU authorities claimed Boeing (BA, Fortune 500) received $19 billion in unfair subsidies from federal and state governments between 1989 and 2006.

The U.S. government filed a similar claim the same year against Germany, France, the United Kingdom, Spain and the EU over subsidies given to Airbus, owned by European Aeronautic Defense & Space Co. (EADS).

According to Monday's ruling, the WTO's appellate body said Boeing received between $3 billion and $4 billion in U.S. subsidies, according to Kirk.

By contrast, the WTO said in December that Airbus received $18 billion in subsidies from European governments.
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Kirk argued that subsidies given to Airbus were larger "by multiples" and that European subsidies were "far more distortive than anything that the United States does for Boeing."

EU officials, for their part, argued the ruling confirms that the U.S. government has given Boeing billions of dollars of illegal subsidies under WTO rules.

"Today's ruling vindicates the EU's long-held claims that Boeing has received massive U.S. government hand-outs in the past and continues to do so today," said EU Trade Commissioner Karel De Gucht.

De Gucht estimated that the cost of U.S. subsidies for European aerospace industry "run into billions of euro" and said the U.S. government "should now put an end to such harmful subsidies."

Including subsidies from certain U.S. states, De Gucht said Boeing has received between $5 billion and $6 billion.

In a statement, Boeing said the WTO rulings "establish conclusively and finally" that European subsidies put Boeing and American workers at a competitive disadvantage.

According to Boeing, the WTO rejected 66% of the EU's claims that Airbus had lost sales as a result of U.S. subsidies and struck down most of the claims that Airbus had lost market share.

The Chicago-based company said it will work with U.S. authorities to determine what steps to take in response to the ruling.
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In a shot at its European rival, Boeing said, "Airbus has not shown the same commitment to compliance with the WTO's decisions and rules."

Airbus continues to benefit from generous subsidies from European governance "in defiance of the WTO," according to Boeing.

Rep. Rick Larsen, who represents a district in Washington state near Boeing's Everett plant, hailed the decision as vindication for America's aerospace workers.

"Today's announcement is a validation of what I have been saying all along: Boeing has had to play on an uneven playing field as Airbus has juiced up on illegal fiscal steroids," Larsen said in a statement.