The World Trade Organization (WTO) on Monday upheld a ruling that Boeing received “at least” $5.3 billion of unfair subsidies between 1989 and 2006 and agreed with Airbus that the effect of the financial support is larger than their face value in light of their “particularly pervasive” nature.

The appeal was launched by the European Union last year challenging key findings of the WTO ruling in March that the US provided aid to Boeing through federal research grants and state support in developing aircraft including the 787 Dreamliner. The EU disputed, among other issues, the amount of state aid. The US filed a parallel challenge to the subsidies European governments have provided Airbus (ATW Daily News, May 19, 2011).

The WTO’s seven-member Appellate Body also extended the amount of Boeing subsidies, and said the US aircraft manufacturer is set to receive an additional $3 billion to $4 billion in future state and local subsidies.  

The appellate judges in Geneva concluded that the US National Aeronautics and Space Administration (NASA) and US Dept. of Defense subsidies gave Boeing a competitive advantage causing Airbus to lose sales of the A330 and A350 models. Conversely, they backed the US in its argument that subsidies for Boeing’s 777 aircraft didn’t harm A340 sales.  

As was expected, both sides claimed victory in the long-running dispute.

“The Appellate Body has now spoken in both the Airbus and Boeing cases,” said Airbus head of public affairs and communications Rainer Ohler. “Comparing the core claims made by both sides, the net outcome is clear:  Boeing’s cash grants are fundamentally illegal, while the system of loans to Airbus by European governments is legal and may continue.” 

Boeing said in a statement that the Appellate Body’s decision “confirms that in terms of amount, effect and nature, US government support to Boeing is minimal in comparison to the massive European subsidies provided Airbus.” It noted that “the Appellate Body found that unaddressed subsidies to Boeing total approximately $3 billion—about one-sixth of the $18 billion Europe has given to Airbus.”

Speaking from the WTO’s headquarters by satellite to journalist in Brussels and Washington, EU trade commissioner Karel De Gucht said the “ruling vindicates the EU's long-held claims that Boeing has received massive US government handouts in the past and continues to do so today. The costs to the EU industry from these long-term subsidies run into billions of euro. This landmark ruling clearly shows the US has used an unlawful way of supporting business that has stood in the way of fair competition. The US should now put an end to such harmful subsidies."

“It is now clear that European subsidies to Airbus are far larger—by multiples—and far more distortive than anything that the United States does for Boeing,” US trade representative Ron Kirk said in a statement. “The United States is ready to address all of the WTO findings, and we expect Europe to do the same.”