Boeing (BA) - Get Report claimed victory Monday in an ongoing squabble with the European Union over subsidies despite a World Trade Organization ruling that a state tax break given to the aerospace giant to help with development of its new 777X jetliner was a prohibited support.
The WTO cried foul on a renewed tax cut Washington provided to Boeing in 2013 when the company was considering where to base assembly for its new long-haul jet. The European Union, which backs Boeing rival Airbus, said the decision was a "landmark victory" in a dispute that dates back to the mid-2000s.
But Boeing in a statement noted that the EU had challenged seven different state tax incentives totaling $8.7 billion but only one, worth $50 million a year, was found to be impermissible. Boeing said that the WTO determined that to date Boeing has received no benefit from the 777X rate incentive and will not do so until 2020 when the first plane is delivered.
"Today's decision is a complete victory for the United States, Washington State and Boeing," J. Michael Luttig, Boeing's general counsel, said in a statement.
Luttig noted that the WTO in September ruled that Airbus had received $22 billion in illegal subsidies from the EU, a decision that the European Union appealed in October.
"The WTO has repeatedly found that Airbus is entirely a creature of government, and they must now bring themselves into compliance with the international laws or risk massive sanctions," said Luttig.
Though billions are at stake, the back and forth between Airbus and Boeing over subsidies has been going on for so long that investors have largely tuned it out. Indeed, shares of Boeing traded down less than $1, or about 0.35%, in late morning trading Monday.
The WTO cannot force nations to comply with rules or drop payments but it can authorize retaliatory measures designed to pressure governments to fall in line. A source familiar with Boeing's thinking said that the company considers this a win because relative to the ruling against Airbus and the EU they still believe the U.S. has leverage.
Airbus, in response to the latest ruling, reiterated its call for new negotiations to set global rules on how the aerospace industry operates and attempt to end the long-running dispute.
"I continue to think that the only way out of the ridiculous series of disputes initiated by the U.S. is to agree on a set of globally applicable rules for the support of the civil aircraft industry, which would benefit both sides of the Atlantic," Airbus CEO Tom Enders said in a statement.