Boeing: WTO Ruling Could Lead To Biggest Retaliatory Tariffs Ever

Watch video 01:05  Airbus to cut 3700 jobs in Europe

A final ruling by the World Trade Organization (WTO) that the European Union illegally helped Airbus with $22 billion in subsidies authorizes the United States to impose retaliatory tariffs to recover losses suffered by USA aircraft manufacturer Boeing, according to a press release by Boeing on Tuesday.

The WTO decision affirmed a ruling that France, Germany, Spain and the United Kingdom had failed to adequately remedy market-distorting aid for the launch of Airbus's A380 superjumbo, infrastructure support and equity investments that unfairly benefited the plane maker.

For its part, Airbus emphasized that the "WTO has now dismissed in their entirety 94% of Boeing's original claims" and focused on the "much more interesting part - on Boeing's more egregious and competition-damaging subsidies", which the WTO has not yet finished ruling on.

The trade court in September ruled in Boeing's favor in another case brought by the European Union, overturning an earlier finding that $8.7 billion in state aid to Boeing for making the 777X in Washington was a prohibited subsidy.

"President Trump has been clear that we will use every available tool to ensure free and fair trade benefits American workers", Robert Lighthizer, the USA trade representative, said after the ruling. WTO rules allow it to target any industry since all goods fall into one category. NJ gov signs bill to skirt GOP tax law provision MORE (R-Texas) said in a statement.

It has been predicted that the tarrifa of Boeing could reach billions of dollars a year starting as early as 2019.

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Airbus General Counsel John Harrison said: "Airbus recognizes the importance of the WTO and the Appellate Body's findings and will do what is necessary to correct any errors and this report confirms the efforts we are making. It shatters Boeing's claim it perpetuated for years that their WTO case undermines European industrial-government partnership".

Boeing says Airbus received illegal aid worth $22 billion, including $18 billion in loans from governments. Airbus estimates the total amount of lost sales since the beginning of these disputes at over $100bn.

A negotiated settlement remains possible, and the same appellate body that ruled on Tuesday must still decide the other half of the dueling claims: allegations that the United States improperly subsidised Boeing. Boeing has estimated that it suffered commercial damages worth between US$7 billion and US$10 billion as a result. As airlines expand into the Middle East and China, both companies will be vying for new business, he said.

Airbus says Boeing's willingness to deliver the last rites to the A380 contradicts Boeing's claim that it has been damaged by the same aircraft. It is anticipated that USA tariffs will be authorized up to the amount of annual harm the subsidies are determined to cause.

"The Airbus case against Boeing is yet to come".

"Companies should not have to compete with governments - that is what this case is about", said Robert Novick, co-managing partner at Boeing's trade lawyers WilmerHale.

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