WTO to restrict Boeing for illegal tax breaks

Company - Pavan Pandey - Nov 30,2016

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wto about to sanction boeing over illegal tax breaks

The governmental authority, World Trade Organization, finds Aircraft manufacturing company Boeing has illegally profited billions of dollars from the greatest anti-competitive kind of subsidy.

The European Union has claimed that American multinational corporation Boeing has received more than $8 billion in forbidden subsidies.

The World Trade Organization is about to announce this week that, the US aircraft maker has broken global guidelines against tax breaks and it will have to repay for this act. WTO further added, the company can have the money if it promised to not open any other plants elsewhere; in this matter any of the US state.

The judgment includes, tax incentives Boeing will receive from the Washington state to build its new 777X plane. The development costs of the new aircraft are too big and the risks and rewards too great for the government.

Boeing gets money from NASA and the United States department of Defence which profited the company by an amount ranging between $2 billion and $9 billion from the tax breaks. The World Trade Organization; however, could order it to repay as soon as possible.

This step comes after two months when Boeing claimed a major victory in the row and WTO ruled that the EU had not stopped billions in state aid to Airbus.  The international trade referee stated that without this funding, Airbus’s latest A350 Jet would never have got off the ground.

Boeing 777X is a direct competitor to the A350 with a $22 billion price tag on the European Union support, which comes in the form of development loans that can only be repaid if the jet is a success. According to the source, the legal battles between Airbus and Boeing is expected to continue for another decade.

The Asia-pacific region is expected to be the world’s fastest growing aviation market over the next two decades, worth $2.6 trillion, with China making up the bulk of this amount. Boeing and Airbus declined to comment on the upcoming World Trade Organization ruling, saying it would be inappropriate to do so before the WTO issues its decision.