News
World Trade Organisation says Boeing granted “prohibited” tax incentives for B777X program
December 2nd 2016
The World Trade Organization (WTO) on Monday rejected six out of seven European Union (EU) challenges to U.S. state tax incentives that allegedly support U.S. aerospace manufacturer, Boeing. Read More »
In its ruling, the WTO said the U.S. state of Washington’s $50 million tax incentive for Boeing’s production of B777X aircraft in the Seattle area was “inconsistent” with its subsidies and countervailing measures (SCM) agreement, but it threw out all of the EU’s other challenges, including suspected subsidies for the B737, B747, B767, B777 and B787 programs.
Typically, Airbus and Boeing each claimed victory following Monday’s ruling.
Airbus CEO, Fabrice Brégier, said previous WTO rulings confirmed that the B787 was the most subsidised aircraft in the history of aviation. “Today’s report leaves no doubt that Boeing has gone even further. The 777X will not cost Boeing a single dollar to develop thanks to Washington State’s taxpayers. We estimate the damage to Airbus and the European aerospace industry in the region to be $50 billion so far, and that’s only for the 777X. The United States Trade Representative should take immediate action. This cannot go on any longer.”
Boeing general counsel, Michael Luttig, called the latest ruling "a complete victory for the United States, Washington State and Boeing." He added: "the WTO found in September that Airbus had received US$22 billion in illegal subsidies from the EU and that without these subsidies neither Airbus itself nor any of its airplanes would exist today. By contrast, in rejecting virtually every claim made by the EU in this case, the WTO found today that Boeing has not received a penny of impermissible subsidies." The $50 million for the B777X is not due until the first aircraft are delivered in 2020.
Separately, Airbus Group this week said it will cut 1,164 jobs and transfer another 325 positions from January 1 under the restructuring announced at the end of September.
“Airbus Group envisages a progressive reduction of its current workforce of around 136,000 by a maximum of 1,164 positions. These reductions will mainly affect support and integrated functions as well as the CTO organization. The merger will also conclude the company’s headquarters move from Paris and Munich to Toulouse, accompanied by the transfer of 325 positions. At the same time, Airbus Group is preparing the future by continuing to invest in developing core competences. Around 230 positions will be created to secure critical skills needed for the company’s way ahead in the era of digital transformation,” Airbus said.
