WTO rules on Boeing govt. subsidies

GENEVA, Switzerland, March 31 (UPI) -- The World Trade Organization said Thursday that Boeing had received $5.3 billion in illegal subsidies, which U.S. officials quickly hailed as a victory.

A complaint filed by European communities had complained of 10 categories of tax breaks and government incentives enjoyed by Boeing from 1989 through 2006 that allegedly amounted to $19.1 billion worth of preferred treatment. The WTO, however, ruled that only $5.3 billion of the breaks the company received were illegal, which U.S. Trade Representative Ron Kirk said "confirmed what we have been saying for the last 20 years -- that the WTO-inconsistent subsidies that the Europeans gave (Boeing rival) Airbus dwarf anything that the U.S. government has given to Boeing."

In 2010, a WTO panel found that Europeans passed on $20 billion in illegal subsidies the Airbus.

"Although today's panel agreed with the EU in some areas, the program it asked the United States to remove were worth only $2.7 billion," the federal trade office said.

Among the illegal benefits given to Boeing was $2.2 billion given under the Foreign Sales Corporation/Extraterritorial tax measures that were abolished in 2006. That leaves Boeing with $2.7 billion in current illegal subsidies.

Before the ruling, European Aeronautic Defense and Space Co. subsidiary Airbus of Blagnac, France, said it believed the ruling would confirm that Boeing, of Seattle, had received "massive and illegal aid" from the U.S. government through research and development programs at the Pentagon and NASA.

Boeing disputed Airbus' assessment, saying the report would likely be "a massive rejection of complaints by the European Union." Boeing also said before the ruling that it had expected about $3 billion in U.S. aid the company received was "non-compliant" with world trade rules, Europolitics reported.

Boeing has complained EADS could rely on European government subsidies to undercut Boeing's price or to absorb losses if it won the contract with a low bid.

EADS has claimed Boeing's subsidies, which it had estimated at more than $5 billion, not only caused EADS to lose $45 billion in sales from 2002 to 2006 but also helped Boeing develop the 787 Dreamliner.

The Dreamliner is the first passenger jet made mainly with plastic composites, making it lighter and more fuel-efficient than other commercial aircraft.

The Dreamliner, far behind schedule, took its first test-flight Dec. 15, 2009. Boeing officials said they hope to receive certification for the plane midyear and deliver the first planes to All Nippon Airways by September.

All Nippon ordered 50 Dreamliners with an option to buy 50 more in April 2004.

Concerning Thursday's ruling, Boeing has 30 days to file an appeal.