The Office of the U.S. Trade Representative (USTR) on Friday officially filed an appeal with the World Trade Organization (WTO) regarding the international organization’s November ruling that certain tax incentives offered by the state of Washington to get The Boeing Co. (NYSE: BA) to build a wing and assembly plant for the company’s new 777X were illegal under WTO agreements.
No details are available on the appeal. The WTO said simply that the appeal was filed and that more information would be available within the next few days.
At the time of the ruling, both Boeing and Airbus claimed victory in the dispute over $8.7 billion in incentives the state offered Boeing to build the plant in Washington. Boeing called the ruling “a complete victory for the United States, Washington State, and Boeing.” Airbus, on whose behalf the European Union (EU) filed the original complaint, said it was a “knockout blow to Boeing’s record-breaking subsidies.”
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The EU’s case against Boeing included complaints against 7 specific tax breaks offered by the state. Of those the WTO sided with the EU on just one: a reduced business and occupancy tax rate for the manufacture and sale of commercial airplanes.
According to Leeham News, Boeing received $521 million in subsidies from the state of Washington in 2014-2015 and an as-yet-undetermined amount for 2015-2016. Boeing’s agreement with the state also stipulates that if the WTO rules against the subsidies, the state is on the hook for coming up with a way to replace the tax breaks.
The EU may yet file its own appeal on the six subsidies that were not ruled illegal by the WTO. Leeham News also has a more detailed explanation of the issues.
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