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Boeing subsidy ruling due from WTO Boeing subsidies should be withdrawn, says WTO
(about 2 hours later)
The World Trade Organisation (WTO) is set to make its latest ruling in a multi-billion dollar battle between planemaking giants Boeing and Airbus. The World Trade Organization (WTO) has ordered more than $20bn (£13bn) in US government subsidies should be withdrawn from Boeing, according to agency reports.
It will give its initial decision over claims illegal subsidies were made by the US government to Boeing. An interim report released on Wednesday is said to back European complaints over $17bn in research contracts from Nasa and the Pentagon.
The case was brought by the European Union which says Washington's support is anti-competitive. Another $4bn tax breaks came from Washington state.
Earlier this year, the WTO ruled that the EU paid illegal subsidies to Airbus parent firm EADS. The European Union argued that this support was anti-competitive.
Brussels has appealed against that decision - saying that it would challenge the finding that support for the A380 plane was an export subsidy and therefore illegal. Earlier this year, the WTO ruled that the EU paid illegal subsidies to the European firm, EADS, the parent company of Boeing's arch-rival Airbus.
The WTO report has found the Boeing aid "actionable" and has called for it to be withdrawn but has stopped short of labelling the state incentives "prohibited," which would require faster remedies, according to sources.
There was no immediate confirmation of the findings from the United States, although a spokeswoman for the US Trade Representative' s office confirmed it had received the interim report.
The EU is appealing against the earlier decision by the WTO that it itself was guilty of giving EADS illegal subsidies in the form of support for the A380 plane.
It added that it would also contest the ruling that there had been a causal link between support to Airbus and adverse effects to Boeing.It added that it would also contest the ruling that there had been a causal link between support to Airbus and adverse effects to Boeing.
Truce in sight?Truce in sight?
The acrimonious tit-for-tat spat has dragged on for almost six years. Brussels brought its case to the WTO in October 2004 - on the same day that Washington complained about EU subsidies to Airbus.The acrimonious tit-for-tat spat has dragged on for almost six years. Brussels brought its case to the WTO in October 2004 - on the same day that Washington complained about EU subsidies to Airbus.
The latest ruling will not be made public as it is only a preliminary finding. Earlier, an Airbus spokeswoman said the two rivals may negotiate a settlement.
However, an Airbus spokeswoman said that it expected the WTO to "confirm" that Boeing received billions of dollars in illegal subsidies.
She added that this could lead to the two rivals negotiating a settlement.
Some analysts have said that such an agreement would be in the best interests of both companies - allowing them to focus instead on developing their aircraft.Some analysts have said that such an agreement would be in the best interests of both companies - allowing them to focus instead on developing their aircraft.
Violation claimViolation claim
The EU complaint accuses Washington of funnelling subsidies to civil aviation through military research funds.The EU complaint accuses Washington of funnelling subsidies to civil aviation through military research funds.
It claims that the US violated international trade rules by making about $23bn (now worth £14.8bn) of subsidies to Boeing as defence funding.
But Boeing, the maker of the long-delayed 787 Dreamliner, has insisted that all US support was above board.But Boeing, the maker of the long-delayed 787 Dreamliner, has insisted that all US support was above board.
In a statement ahead of the WTO's preliminary decision, it said it looked forward to the ruling saying it had "full confidence in WTO processes and its dispute-resolution procedures".In a statement ahead of the WTO's preliminary decision, it said it looked forward to the ruling saying it had "full confidence in WTO processes and its dispute-resolution procedures".
It added that none of Washington's actions had "the market-distorting impact of launch aid nor even approach the sheer scale of European subsidy practices".It added that none of Washington's actions had "the market-distorting impact of launch aid nor even approach the sheer scale of European subsidy practices".