WTO condemns US illegal subsidies to exporters

FSC: WTO condemns US subsidies to exporters; recipients of illegal support include Boeing

Today the WTO panel decision regarding U.S. federal tax subsidies for exporters was circulated to WTO Members. The Panel has found in favour of the EU in all respects. It concludes that despite some changes to its legislation the US has yet to abide by previous WTO rulings and the recommendations of the WTO Dispute Settlement Body regarding the FSC/ETI dispute. The Panel also makes clear that the tax subsidies which have been carried forward by using transitional periods and so-called ‘grandfathering’ violate WTO rules.>

Peter Mandelson, EU Commissioner for Trade said “The EU welcomes the WTO’s clear language and conclusions. It has been confirmed that the U.S. has yet to comply with previous WTO rulings. The EU appreciates that the U.S. Congress has repealed the original FSC tax scheme. However, despite European opposition, the US Congress chose to perpetuate the prohibited tax subsidies through a transition period and the permanent ‘grandfathering’ of existing contracts. These provisions, which are now contained in the American Jobs Creation Act are unacceptable in view of the large benefits involved. We estimate these advantages, for example, to add up to over €750 million for Boeing alone. This is striking because the US is asking European companies to abide by the WTO definition of subsidies regarding grants to Europe’s civil aircraft sector. I hope that the U.S. authorities will choose to act consistently in this matter.”