A World Trade Organization (WTO) panel on Monday found that a tax incentive provided by the state of Washington to Boeing for development of the 777x widebody aircraft is a prohibited subsidy
In the decision, part of a 2014 case filed by the EU against the U.S., the WTO also concluded that six other tax incentives disputed by the EU are not prohibited.
The case is part of a broader and long-running dispute between the EU and the U.S. over subsidies to plane manufacturing giants Airbus and Boeing. In September, for example, the WTO found that Airbus
had utilized more than $4 billion in launch aid to develop its A350XWB aircraft.
In the most-recent ruling, the WTO panel didn't put a dollar value to the financial benefit Boeing has received as a result of the business and occupation tax incentive passed by Washington state in 2013.
Boeing, however, said in a statement Monday that the WTO found future incentives totaling no more than $50 million to be impermissible. Benefits from the incentive won't begin until 2020 when the first 777x is delivered, Boeing added.
In its statement on the ruling, Airbus said that the package of tax incentives provided by Washington is worth $9 billion through 2040.
Both plane manufacturers called the ruling a victory.
"The United States and Boeing picked this fight at the WTO, and today's ruling is yet another blow for that strategy," Airbus CEO Tom Enders said in a prepared statement Monday. "Those prohibited subsidies must be withdrawn immediately following today's historic ruling, meaning that Boeing must give up these massive tax subsidies."
Boeing countered that it expects to retain all of the Washington tax incentives, even in the case of an appeal from the EU and Airbus.
"Today's decision is a complete victory for the United States, Washington State and Boeing," said Boeing general counsel J. Michael Luttig.
The WTO panel recommended that Washington withdraw the business and occupation tax subsidy within 90 days. The organization, however, lacks enforcement power.