Boeing: WTO Ruling Could Lead To Biggest Retaliatory Tariffs Ever

Boeing: WTO Ruling Could Lead To Biggest Retaliatory Tariffs Ever

The World Trade Organization rules that European government subsidies are harmful to Boeing (BA -0.7%) because they illegally assisted Airbus's (OTCPK:EADSF, OTCPK:EADSY) development of A380 and A350 jets.

At the same time, the WTO is close to finalizing a similarly drawn-out case against subsidies for Boeing, and Airbus says this could in turn spark European Union sanctions against the United States.

European Trade Commissioner Cecilia Malmstroem insisted that the ruling also rejected "the vast majority" of U.S. claims against it, while saying in a statement that the bloc "will now take swift action to ensure it is fully in line with the WTO's final decision in this case".

U.S. Trade Representative Robert Lighthizer said in a statement the United States would slap countermeasures on European goods unless the EU fell into line.

The size of US tariffs to be allowed will be determined through a WTO arbitration process, and will be based on the annual harm to USA and Boeing - losses that the USA had previously pegged as ranging from $7 billion to $10 billion a year. Tariffs could be scheduled as early as 2019.

"Today's final ruling sends a clear message: Disregard for the rules and illegal subsidies is not tolerated", Boeing CEO Dennis Muilenburg, said in a statement.

"The commercial success of products and services should be driven by their merits and not by market-distorting actions".

A second ruling, about alleged subsidies for Boeing aircraft, is expected later this year.

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.

Just one finding against the United States now remains before the WTO, which concerns a Washington state tax measure. Boeing believes that ruling will be reversed, but if not, Boeing has pledged to do whatever necessary to come into full compliance in the interest of upholding rules-based trade, which is essential to fairness and the future prosperity of the global aerospace industry.

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