Chicago headquarters cited in Boeing WTO loss

By Julie Johnsson
Posted Sep. 15, 2010 at 11:30 p.m.

Boeing Co. received billions of dollars in illegal government subsidies, including $25 million in incentives that Illinois provided the plane maker to relocate its world headquarters to Chicago in 2001, a panel of the World Trade Organization determined.

The WTO report is confidential and was released to U.S. and European trade officials Wednesday. It is the first ruling in the second of dueling trade cases filed by the U.S. and European Union against each other last decade alleging that aircraft manufacturers had received unfair government support.

People briefed on the preliminary WTO report said the trade court panel determined that Boeing received market-distorting research and development aid from NASA and the Defense Department, tax-related export subsidies and tax incentives from the states of Illinois, Kansas and Washington.

Chicago-based Boeing would ultimately be required to repay any illegal incentives that were determined to have caused an adverse effect on competition for the European Union, which brought the trade litigation, or Airbus, sources said.

However, it could be years before the finding against Boeing is made final. The WTO panel must first file a final report in the case, which Boeing would then have the right to appeal. In the meantime, European officials are pushing the U.S. to drop the costly WTO litigation and to negotiate a new trade treaty spelling out permissible aid for aircraft manufacturing.

As diplomatic officials digested the ruling Wednesday, sources disagreed on the degree to which Boeing benefited from the aid.

Also uncertain was whether the finding was as sweeping as the court’s determination earlier this year that France-based Airbus benefited from about $20 billion in illegal subsidies, including $15 billion in below-market-rate launch aid in developing most of its commercial jetliners.

Boeing, in a statement made before the WTO report was issued, claimed that none of its incentives had “the market-distorting impact of launch aid nor even approach the sheer scale of the European subsidy practices.”

“It’s nothing comparable to the European launch aid,” said Loren Thompson, an analyst at the Lexington Institute, a conservative think tank whose clients include Boeing. “I think you would have to view this as a partial victory for Boeing.”

However, others noted that the illegal subsidies provided to Boeing also totaled in the billions of dollars and that the panel sided with the Europeans on all of their main claims.

“Today’s ruling provides us with the second half of the story,” said a European Commission official, who spoke on the condition that he not be identified since the report is confidential. “The EU has said all along that only negotiations at the highest political level can lead to a real solution, and we hope that today’s report provides momentum in that direction.”

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  1. evilbunnyrabbits Sep. 15, 2010 at 5:41 pm

    Isn’t this what governments are supposed to do? Create incentives for businesses to setup shop in their cities?

  2. Mucho Sep. 15, 2010 at 5:48 pm

    Aren’t things equal if they both received incentives? What a waste of taxpayer and corporate funds!!

  3. Paul Sep. 15, 2010 at 6:06 pm

    The WTO?
    don’t make me laugh.
    It has about as much power and influence as the UN.

  4. John in Glenview Sep. 15, 2010 at 6:17 pm

    There are so many bad parts in this article I can only name a few.

    First, how do I find out what is “illegal” by WTO standards? And what does this mean? We (whoever “we” is) have been illegaly giving money to Boeing? So to keep jobs and and sales in a high-end market focused in the US is beng challenged by the French and Indians?

    And what exactly makes this “illegal”?

    The Tribune once again playing on words to get clicks.

    “People who had been briefed on the ruling described the results to the Tribune” does not in any way reflect the standards that the Washington Post needed during the Nixon problems, and even they got one or two hits wrong.

  5. captinjoe Sep. 15, 2010 at 6:24 pm

    WTO???? WTF WTO as useless as ti%s on a Bull!!!!

  6. Airbus Sep. 15, 2010 at 8:13 pm

    It’s obvious the EU is supporting Airbus trying to go after Boeing.

  7. Greg Sep. 15, 2010 at 8:22 pm


    The WTO is more powerful than you think. Go back to the late Clinton years, when China was granted permanent Most Favored Nation trade status, and they were able to become members of the WTO.

    What’s happened since? Eff the WTO. Drop a bomb on ‘em. And China.

  8. Tyrone Kalogeresis Sep. 15, 2010 at 8:24 pm

    Why is this nation being controled by the WTO? This nation should help out businesses compete with other businesses overseas.

  9. John P Sep. 15, 2010 at 8:45 pm

    With apologies to Capt. Renault:

    “I’m shocked, shocked to find that illegal incentives are going on in here!”

    New York, Losas Angeles, Houston, San Francisco, but NOT my home town Chicago! Our impeccably upright city council and our Mayor, Richard “Honest ****” Daley would never ask the taxpayers of my fair city to shoulder the revenue losses caused by giveaways to Big Arms manufacturers. Just to get them to move their offices here? And yo know, Boeing would NEVER pull up stakes and move to the next town when tax subsidies expire (would they)?