Washington state offered "prohibited" subsidies to Boeing as part of a massive tax incentive package to secure production of a new passenger plane, a World Trade Organization panel ruled Monday.
Lawmakers in Washington, where Boeing was founded and headquartered until moving to Chicago in 2001, approved $8.7 billion in incentives in 2013 for the aerospace giant to make the 777X at its Seattle-area facilities.
The WTO panel, however, found that $5.7 billion of the incentives set to be awarded between 2024 and 2040 — which applied to production of the jet's wings — improperly excluded foreign competition, the Associated Press reports.
The ruling ordered the U.S. government to address the incentives in question but rejected most of the other complaints levied by the European Union as part of a long-running spat between Boeing and French rival Airbus.
“We expect the U.S. to respect the rules, uphold fair competition and withdraw these subsidies without any delay,” EU Trade Commissioner Cecilia Malmstrom said in a statement.
Boeing responded that the ruling applied to just a portion of one incentive among seven challenged by the EU and declared that the company "has not received a penny of impermissible subsidies."
Boeing officials also said that they expected an appeal from the EU and Airbus and slammed their rival as "a creature of government" that would not exist without "$22 billion in illegal subsidies from the EU."
"After any appeal, we fully expect Boeing to preserve every aspect of the Washington state incentives, including the 777X revenue tax rate," Boeing general counsel J. Michael Luttig said in a statement.
