The EU and the WTO | Brussels, 4 September 2017

The World Trade Organisation (WTO) Appellate Body has today published a report reversing a previous WTO panel ruling of 28 November 2016. That ruling said that subsidies provided by Washington State to Boeing for its 777X aircraft were ’prohibited’ due to local content requirements. The EU disagrees with the Appellate Body assessment of the scheme.

To recall, the EU claimed that a Washington State measure that was granting subsidies to Boeing upon the siting by Boeing of a significant airplane program in Washington, which included as well the siting in Washington of the wing assembly for the same airplane program, is a prohibited local content subsidy. Such subsidies are considered the most trade distortive category of subsidies, as they depend on the use of domestically produced goods.

While the Appellate Body has not confirmed the prohibited nature of the tax subsidies to Boeing for the 777x, Washington State tax breaks are still "actionable" subsidies, i.e. subsidies that violate WTO rules causing economic harm to the producer of another WTO member. This ruling does not affect the obligation of the United States to put an end to the actionable tax subsidies.

Tax support by Washington State to Boeing, extended in 2013 until year 2040, totals several billion dollars, and was already found to be WTO incompatible in 2012 in a previous WTO panel report (DS353) as they result in extensive economic damage to Airbus' aircraft sales. The obligation of the US to withdraw actionable Washington State tax support was also confirmed by the WTO compliance panel in case DS 353 in its ruling in June 2017.

The EU now awaits the report of the WTO Appellate Body on continued non-compliance by the United States in the DS 353 Boeing case and is confident that it will confirm that the US is required to withdraw the Washington State tax measures. In the Airbus case (DS 316) the appeal proceedings are also underway, and the report by the Appellate Body on EU compliance is expected early 2018.

More information

WTO Appellate Body Report on prohibited subsidies on Boeing (September 2017)

Panel report press release (28 November 2016)