Boeing Got $5B in Subsidies, WTO Rules

The World Trade Organization confirmed its interim ruling last September, finding that Boeing received roughly$5 billion in illegal subsidies for some of its civilian aircraft. Airbus, who designed and built the plane that EADS NA hopes to modify for the coming KC-X airborne tanker program. Sen. Maria Cantwell of Washington, a vigorous Boeing supporter, said the latest ruling proved that the EADS NA offering did benefit from subsidies.

“There is a stark contrast between the WTO’s ruling today and their ruling last year against the EU. Today, reports say the WTO upheld their interim ruling and dismissed over three-quarters of the EU’s allegations, identified most of it as associated with U.S. export tax policies repealed in 2004 and reiterated their finding that Boeing did not receive any existing prohibited subsidies,” she said in a statement. “But last year, the WTO was unambiguous in ruling that Airbus had received an illegal subsidy of billions of dollars for aircraft-specific launch aid, including the airframe Airbus put forward as the basis for its tanker bid, and that that subsidy caused direct harm to the U.S. aerospace industry. This final ruling today confirms what we have been saying all along: It is EADS/Airbus that has benefitted from illegal subsidies relating to the Air Force tanker competition.”

Here is the New York Times’ lead on the story:

“A panel at theWorld Trade Organization ruled on Monday that Boeing had received up to $5 billion in improper subsidies for its 787 Dreamliner and other jets , giving it an unfair advantage against its European rival, Airbus, European officials said.

“The confidential ruling affirmed the W.T.O’s interim ruling in September in response to a longstanding complaint by Europe over United States government support of Boeing, officials briefed on the decision said.”

The paper goes on to quote Nefeterius Akeli McPherson, a spokeswoman for the United States trade representative, who “said officials in Washington remained “confident that the W.T.O. will confirm the U.S. view that European subsidies to Airbus dwarf any subsidies that the United States provided to Boeing.”

So the line appears to be that the European subsidies were bigger than the American subsidies. This does not provide a terribly solid ethical baseline for any future discussions since both sides engaged in illegal subsidies, whomever pumped more in. Please just let the contract be awarded to the company with the best product that can be built with a reasonable mix of risk and capability.