Boeing Received Illegal Subsidies

Boeing Co. received illegal subsidies in the form of federal and state tax breaks, the World Trade Organization’s Appellate Body affirmed in a ruling made public March 12, which also found at least $2.6 billion in the form of U.S. government research and defense contracts also represented a subsidy.

In its verdict, which was circulated in advance to the United States and the European Union Feb. 29, the Appellate Body upheld an earlier panel finding that, between 1989 and 2006, Boeing received illegal subsidies from NASA and the U.S. Department of Defense in the form of R&D support.

In regard to the tax breaks, the Appellate Body reversed part of the panel’s findings. The panel had ruled that $2.2 billion in tax breaks provided to Boeing between 1989 and 2006 under the Foreign Sales Corporation/Extraterritorial Income (FSC/ETI) legislation constituted a prohibited export subsidy. It also ruled Boeing had received illegal subsidies from the state of Washington and the city of Everett, Wash., through “Business and Occupation” (B&O) tax reductions and tax credits totaling $16 million over the 1989-2006 review period in question.