Boeing says expects appeal of WTO pro-EU subsidy ruling

Boeing expects the US to appeal a World Trade Organization decision Monday that declared illegal a tax credit 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 offered 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.

The US Trade Representative said it is reviewing the WTO decision with Washington state officials to decide how to respond.

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.

Boeing said the WTO rejected the EU claim 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.

The ruling from a WTO panel is the latest blow in a drawn out trans-Atlantic battle between the aviation industry's two titans, which has seen Airbus and Boeing each score points along the way.

US Trade Representative spokesman Matt McAlvanah said the agency was reviewing the ruling, but suggested it was ready to fight on behalf of the US aerospace giant.

"This case is a small fraction of the overall aerospace dispute, on which the WTO has found overwhelmingly in the United States' favor," McAlvanah said in a statement, noting the WTO has deemed illegal $22 billion in EU subsidies to Airbus.

"The US government will continue to hold the EU to account for illegal, market distorting subsidies that have put American workers and businesses at a competitive disadvantage."