WTO rules U.S. illegally subsidized Boeing

The World Trade Organization ruled Thursday that Boeing Co. has received at least $5.3 billion in illegal U.S. subsidies and must either withdraw them or make up for the harm caused.

The EU had alleged that Boeing received almost $24 billion in illegal subsidies, such as research grants and free use of technology, from NASA, the Department of Defence, and the states of Illinois, Kansas and Washington.

The ruling is the latest development in a six-year contest and will likely next go to a WTO appeals panel.

In its ruling, the WTO said the EU has demonstrated the U.S. gave Boeing "export subsidies that are prohibited" and recommends the U.S. either withdraw them or "take steps to remove the adverse affects."

The report details findings, which were first issued in private to the EU and U.S. in January.

The ruling by a panel of trade judges said that "some of the measures ... constituted specific subsidies" but rejected other claims including some involving Washington state's taxes.

The judges said some of the tax incentives offered by Washington state were not in fact "prohibited export subsidies" as the Europeans claimed, but allowable support Boeing's large civil aircraft division.

Competing aircraft maker Airbus, a unit of European Aeronautic Defence and Space Co., estimates it has lost $45 billion US in aircraft sales because of the subsidies.

A separate WTO trade panel, ruling on U.S. complaints, also has faulted European governments for illegally supporting Airbus.

Airbus welcomed the ruling saying that WTO had "publicly condemned the United States for giving Boeing massive illegal subsidies that caused Airbus to lose $45 billion in sales."

Boeing, meanwhile, said the WTO had "shattered the longstanding European myth that illegal Airbus subsidies are necessary to fend off alleged U.S. subsidies to Boeing."

Boeing acknowledged it got $2.6 billion of illegal U.S. funding, but said that pales in comparison with $20 billion of "illegal Airbus subsidies."

That interpretation was echoed by the office of the U.S. Trade Representative, which said the subsidies the Europeans give to Airbus "dwarf anything that the U.S. government does for Boeing."