The Wall Street Journal
By MATTHEW DALTON
Updated Dec. 19, 2014 3:31 p.m. ET
BRUSSELS—The
European Union on Friday filed a complaint at the World Trade
Organization alleging that billions of dollars of tax breaks handed to
U.S. aviation company Boeing Co. by Washington state violated
international trade rules.
The complaint extends a long-running
trade battle between the U.S. and the EU over their respective aviation
champions: Boeing and Airbus Group NV, based in Toulouse, France.
Officials
were attempting to find a negotiated solution to the dispute, but
Friday’s complaint shows that government policies in the sector remain a
source of trans-Atlantic friction.
The European Commission,
which manages the EU’s trade policy, said on Friday that the complaint
relates to Washington state’s decision in November 2013 to extend a
tax-incentives program for Boeing from its original end date in 2024
until 2040. The extension is worth $8.7 billion, a sum the commission
said was “the largest subsidy for the civil aerospace industry in U.S.
history.”
International trade agreements limit the financial
support that governments can give to companies. Panels of judges
convened by the Geneva-based WTO have the power to enforce these
agreements. Now the U.S. and the EU will have 60 days to negotiate,
before a panel is convened to rule on the dispute.
Washington
state passed the tax breaks in a bid to keep Boeing from moving the
manufacture and assembly of its newest jet, the 777X, to lower-cost
states or even other countries. Months later, Boeing agreed to stay put
in Washington, but only after wringing concessions from labor unions
with a new contract that workers approved with just 51% of the vote.
Alex
Pietsch, Washington state director of the Governor’s Office of
Aerospace, said in a statement that Gov. Jay Inslee “is aware of the
request for consultations [by the EU] and we will continue to work with
[the U.S. Trade Representative] on this important issue.” Mr. Pietsch, a
key architect of the incentive package and the state’s bid for the 777X
work, noted 460 companies in 2013, including those based in Europe who
have facilities in Washington, benefited from the state’s tax structure
for the aerospace industry.
Tim Reif, the general counsel for the
Office of the U.S. Trade Representative, said in a statement that the
EU’s new claims “lack any foundation.”
“When the EU is ready to
resolve this dispute on the basis of WTO rules, rather than just
dragging it out, they will find us ready,” Mr. Reif said.
Fabrice
BrĂ©gier, who heads Airbus’s jetliner unit, this year attacked the
financial support Boeing had won from local government authorities. He
urged European governments to oppose the package, which he said was
worth more than Boeing’s development cost for the plane. Airbus has no
immediate further comment.
Boeing said in a statement that the
tax breaks aren’t “market-distorting subsidies. They are available to
all aerospace companies, including Airbus and its suppliers.”
The
complaint is the latest in a tit-for-tat, trans-Atlantic battle that
has gone on for more than a decade. In 2004, the Bush administration
withdrew from an agreement with the EU covering government support for
the two companies.
The U.S. then brought a WTO complaint against
the EU claiming that cheap financing provided by governments to
Airbus—known as “launch aid”—violated WTO rules. The EU soon responded
with its own complaint challenging a suite of subsidies it claimed the
U.S. gave to Boeing, including tax breaks, support from NASA and
research and development funds from the Department of Defense.
The
EU previously had tried to challenge the tax-incentives program as part
of its existing complaint against the U.S. over Boeing, but the WTO
rejected that effort.
Panels of WTO judges have ruled in both
previous complaints that the U.S. and the EU have given illegal
subsidies to Boeing and Airbus. After appellate panels upheld much of
the initial rulings, both sides said the other wasn’t respecting the
rulings and asked the WTO to impose billions of dollars in trade
penalties on the other side.
Yet U.S. and EU officials also said
they would attempt to negotiate a solution rather than embark on a
process of enforcing these rulings.
Those efforts have yielded little fruit, a senior EU official said
“Everyone
agrees that this can only be settled out of court,” the official said.
“But right now we have the impression that there is no appetite for this
from the U.S.”
—Jon Ostrower and Robert Wall contributed to this article.
Source: http://www.wsj.com
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment