WTO To Rule Against Boeing In Subsidy Dispute

The World Trade Organization will uphold a ruling later this month against Boeing Co. (NYSE: BA) that alleged the aircraft maker received billions of dollars in unfair subsidies from the U.S. government, Reuters reported Friday.

In a massive trade dispute that began in 2005, Boeing stands accused by the European Union of unjustly receiving grants and tax breaks to help it develop new planes. Boeing and many U.S. government officials have countered that rival Airbus, a unit of European Aeronautic Defence & Space Co. (Paris: EAD), got improper largess from European governments for the same purpose.

A WTO panel ruled last year that Boeing had received at least $5.3 billion in subsidies through grants to the National Aeronautics and Space Administration as well as tax breaks, following a six-year investigation. The panel also ruled that Airbus had unfairly received low-interest loans from Germany, Spain and Britain to finance the Airbus A380 jet, hurting sales of Boeing aircraft.

Both the United States and the EU appealed the panel's rulings, saying the competitive damage caused was much greater than the amounts determined by the WTO.

The ruling may prevent the two companies from receiving aid to develop new aircraft in the future, but the ramifications of the case are expected to take years to sort out. Competitors in China, Canada, Russia and Japan are watching the case as an opportunity to challenge Boeing and Airbus's dominance in manufacturing jets.

The WTO will likely release its report in the case on March 22, Reuters reported. The Geneva-based trade body declined to comment to the news service.