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WTO case law

1 Dec 2016

WTO has published a report on the tax incentives established by the USA for the manufacturing or sale of commercial airplanes under the “Boeing 777X” programme

On 14 December 2014 the European Union (EU) requested the World Trade Organization (WTO) for consultations regarding legitimacy of tax incentives established by the United States of America (USA) in relation to the civil aircraft “Boeing 777X” manufacture. 

The Panel established pursuant to articles 4.4 and 30 of the WTO Agreement on Subsidies and Countervailing measures (the “SCM Agreement”) has found that that the B&O aerospace tax rate given by Washington State government for the manufacturing or sale of commercial airplanes under the “Boeing 777X” programme is a prohibited subsidy. In particular, the panel concluded that: “the European Union has demonstrated that the B&O aerospace tax rate for the manufacturing or sale of commercial airplanes under the 777X programme, pursuant to ESSB 5952, is a subsidy contingent upon the use of domestic over imported goods, prohibited under Articles 3.1(b) and 3.2 of the of the SCM Agreement. Accordingly, taking into account the nature of the prohibited subsidy found in this dispute, the Panel recommends that the United States withdraw it without delay and within 90 days” (see paras 8.5 and 8.6 of the Report of the Panel WT/DS487/R).

With respect to other six challenged measures, the Panel has dismissed the EU challenges to the Washington State tax incentives, as the European Union has not demonstrated that they are de jure contingent upon the use of domestic over imported goods and for this reason they were not considered as prohibited subsidies.

The full Panel Report on this issue you can find here.

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