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Boeing faced WTO over illegal state subsidies for 777X

28 November 2016

The World Trade Organization today expected to rule that Boeing had been granted illegal state subsidies for its newest long-range jetliner, according to people familiar with the finding, The Wall Street Journal reported.

The judgment involved tax incentives Boeing would receive from Washington state to build its new 777X wide body plane, in the latest round in a long-running dispute between the US and the EU over support for Boeing and Airbus Group SE. According to Boeing, the value of the 777X tax incentive was $50 million a year. 

The EU had voiced concern at the WTO almost two years ago about the support package to the revamped version of Boeing's long-range plane the 777 support package for the 777X. The updated model had attracted over 300 orders from carriers including Emirates Airline and Deutsche Lufhansa AG.

According to the EU, Boeing had lined up over $8 billion in prohibited subsidies for the 777X program and the subsidies needed to be immediately rescinded. US officials had called the $8 billion figure inflated. 

Though the WTO was expected to deny most of the EU claims, it was expected to agree that a key income-tax break offered by Washington state represented a prohibited subsidy that needed to be withdrawn, the people said.

Meanwhile, The Telegraph reported that according to industry sources, Boeing benefited by between $2 billion and $9 billion from the tax break, which the WTO could order it to repay as soon as today. 

The move comes two months after Boeing claimed a major victory in the row with the WTO ruling that the EU had not stopped billions in state aid to Airbus.

The international trade referee pointed out that without this funding, Airbus's latest A350 jet would never have got off the ground.
Boeing,  whose 777-X was a direct competitor to the A350, put a $22-billion price tag on the EU support, which came in the form of development loans which only had to be repaid if a jet was a success.

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