Billions for Boeing Flouts Trade Rules, WTO Says

(CN) - The European Commission claims the U.S. failed to comply with a World Trade Organization order to withdraw at least $8 billion in illegal subsidies to Boeing.

Earlier this year, the WTO found that federal and state governments gave Boeing between up to $6 billion between 1989 and 2006, and another $3 billion since. A $476 million subsidy from the city of Wichita, Kan. also flouts WTO rules, the organization said and gave the U.S. government six months to either withdraw the subsidies or remove the adverse impacts to the worldwide aircraft industry.

The European Commission says it received a compliance notice from the U.S. and reviewed the measures to see if they are sufficient to comply with WTO rules.

"The lack of information in the US notification unfortunately facilitated a quick review which suggests that the US has neither withdrawn the illegal subsidies granted to Boeing, nor removed their adverse effects. The EU even has indications that the US could have actually granted more illegal subsidies to Boeing in the meantime," the commission said in a statement .

"We had expected that the U.S. would have finally complied in good faith with its international commitments and would have abided by the WTO rulings that clearly condemned U.S. subsidies to Boeing" said EU Trade Commissioner Karel De Gucht. "We are disappointed that this does not seem to be the case. So, the U.S. leaves us with no other choice but to insist on proper compliance before the World Trade Organization. We are confident that this process will finally lead to a level playing field in the aircraft sector."

The WTO ruling found that U.S. subsidies to Boeing damaged the EU and Airbus, which is headquartered in France and owned by a European consortium. While Airbus planes are outnumbered 3 to 1 by in-service Boeings, it consistently nets 50 percent or more of aircraft orders placed worldwide each year.

Both companies have accused the other taking illegal subsidies since 2004. The WTO ruled in 2010 and again in 2011 that Airbus received improper government subsidies through below-market value loans from several European countries.

The EU's current beef with Boeing involves a $2.6 billion research and development grant from NASA, $1.2 billion from the Defense Department and foreign sales export subsidies of $2.2 billion. In addition to the Wichita subsidy, European regulators also claim an 18-year, $3.1 billion tax break from the state of Washington - where Boeing is headquartered - also disrupts the worldwide marketplace.The EU plans to challenge the U.S. government's non-compliance in the WTO Boeing ruling, and gave the U.S. 15 days to sit down with EU regulators to resolve their differences.

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