World Trade Organization Slams Boeing For Illegal Subsidies

The World Trade Organization (WTO) recently filed raps against plane manufacturer Boeing for receiving $5.3 billion worth of illegal subsidies from the US. CONTINUE READING BELOW.

Posted by Melvin Magadia on Apr 1st, 2011 and filed under Money and Business. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

World Trade Organization Slams Boeing For Illegal Subsidies
 

The World Trade Organization (WTO) revealed Thursday that plane manufacturer Boeing received $5.3 billion of illegal subsidies from the United States signifying an endless dispute that has been marked by years of wrangling.

The WTO revealed that Boeing likewise got $2.6 billion worth of illegal research funding from the National Aeronautics Space Administration (NASA). However, a WTO verdict questioned the inclusion of the more than $2 billion additional funding on the charges. The latest ruling adds to the six-year battle between the Airbus and Boeing, which has already established a record for the world’s largest and most expensive trade dispute.

The WTO verdict supports a similar aid received by Boeing from the European Union. Another WTO trade panel condemned the financial aid given by the EU to Boeing’s rival company, the Airbus, in a similar case filed in 2010. According to Karel De Gucht, the European Union trade chief, Boeing was given and is still receiving huge subsidies.

Airbus, a conglomerate of the European aerospace group EADS, claimed that it has already suffered from losses worth $45 billion in plane sales as a result of the illegal subsidy. Boeing claims that it has suffered the same fate from the Airbus subsidies. US Trade Representative Ron Kirk said that the US has long maintained that the European subsidy of the Airbus will be much larger than what it provides Boeing.

While Boeing acknowledged that it is indeed receiving $2.7 billion financial assistance aside from a dispute that has already been resolved, it accused Airbus of diverting attention to more pernicious kinds of European assistance. The company is referring to the $2.2 billion worth of export assistance covered in a previous aid package known as Foreign Sales Corporation, which the US claims is defunct.

Both Airbus and Boeing can appeal the new verdict, similar to what they did when the WTO concentrated on Airbus. The decision on the appeal is due to be released by next month. The EU can make an appeal as early as Friday a move seem at cutting down the time difference between the two cases.

The dispute between the two airline companies has somewhat tainted the relationship between two of the world’s trading superpowers. Recently, both companies was involved in a contract battle to supply air tankers to the Pentagon, initially awarded to Airbus but eventually awarded to Boeing.

The WTO verdict could be an indication of how developing airline companies in China, Russia, Brazil, Japan, and Canada, would manage their rapidly increasing aircraft industry. However, analysts do not believe that even if the two sides are upheld, it would not have an impact on the future.

 

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