Wednesday, March 14, 2012

WTO Appellate Body Issues Boeing/Airbus Report

An appellate body of the World Trade Organization (WTO) has issued its report on allegations that Boeing received illegal subsidies in the form of municipal bonds and tax breaks as well as federal contracts, and, as has been typical throughout this dispute, both sides have declared victory. See Tom Miles & Tim Hepher, WTO Upholds Ruling on Boeing Subsidies, Reuters, March 13, 2012 (available here). The ongoing trade dispute between the world's two largest aircraft manufacturers began in 2005 when the United States filed a complaint against the EU alleging illegal subsidies to Airbus. The European Communities responded with a similar complaint against the U.S. for allegedly violating the Agreement on Subsidies and Countervailing Measures (SCM) and GATT 1994 through aid to Boeing. The initial panel report issued March 31, 2011 found Boeing to be the recipient of at least $5.3 in illegal subsidies. Yesterday's appellate body report upheld most of the initial panel's findings, in particular finding that NASA contracts and bonds issued by Wichita, Kansas violated articles of the SCM. The appellate body reduced the overall value of illicit subsidies to between $3 and $4 billion. The U.S. will now have six months to end all subsidies and comply with the ruling, though the issue of compliance will likely lead to further proceedings. An appellate body has already ruled on the allegations of subsidies to Airbus and the two sides are currently arguing over whether Airbus has adequately complied with that ruling. See Aviation Prof Blog, Jan. 16, 2012 (available here). The complete appellate body report along with a summary of key findings can be found here.

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