Boeing expects US appeal of WTO pro-EU subsidy ruling

Boeing expects the US to appeal a World Trade Organization decision Monday that struck down a plane-building subsidy offered by Washington state, company representatives said.

The WTO decision was a win for the European Union on behalf of Airbus, which had argued that a Washington state tax benefit to Boeing to build the 777x jetliner was an unfair subsidy which violates global trade rules.

"I fully expect this case will be appealed," said Bob Novick, an outside counsel representing Boeing, adding that a final resolution of the case might not come until early 2019.

Novick criticized the rationale behind the decision to strike down the Washington state Business and Occupancy (B&O) tax rate as wrongly concluding that the law favored the domestic manufacturing of goods because Boeing had not imported the wing for the 777x as it had for the 787 plane.

The WTO "jumped to the conclusion that the somehow the law favored domestic over imported," he told reporters in a conference call.

The US Trade Representative has not yet commented on the case, but it commonly appeals negative rulings by the WTO.

Boeing said the WTO rejected EU claims that the company had received $8.7 billion in subsidies. Boeing estimates the total benefit of the disputed Washington state provision at $50 million a year, or a maximum of $1 billion.

Boeing has not received any of the benefits yet under the B&O tax break and does not expect to see any until 2020 at the soonest, Boeing officials said.

"After any appeal, we fully expect Boeing to preserve every aspect of the Washington state incentives, including the 777X revenue tax rate," said J. Michael Luttig, Boeing's general counsel.