On 9 June 2017, the World Trade Organization (WTO) confirmed that the United States has taken no appropriate action to comply with its obligation to withdraw subsidies declared illegal by WTO itself.

In 2012, the WTO ruled that the United States had granted illegal subsidies to Boeing, totaling to US$ 5-6 billion disbursed between 1989 and 2006. After that date, the granted subsidies are estimated to be at least US$3.1 billion. The subsidies allowed Boeing to sell its aircraft more cheaply, to the detriment of Airbus. The illegal subsidies include export support, direct grants, free access to facilities, technology transfer at no cost, and tax abatements.

Therefore, the United States had notified the European Union that it had taken a number of actions withdrawing the subsidies or removing their adverse effects. However, the EU considered that the United States had not complied with the WTO recommendations and rulings of 2012.

WTO’s recent decision backed the EU position, finding that the US has not only failed to remove the existing subsidies but has also extended them and added significant new distorting subsidies, such as the incentives from South Carolina and a US Federal Aviation Administration R&D programme, continuing to cause severe damage to Airbus in lost sales and market opportunities. This decision adds to another WTO ruling of November 2016 in which, for the first time in the aircraft disputes, the WTO found the US guilty of providing prohibited subsidies to Boeing of around 5.7 billion dollars.

EU Trade Commissioner Cecilia Malmström, said: “We will continue to firmly defend our industry to ensure we have a level-playing-field. EU companies must be able to compete on fair and equal terms. Today’s WTO report is an important step in that direction.”

Davide Scavuzzo