WTO to hand over report on Boeing subsidies

The World Trade Organization will hand a report to US and EU officials on Monday finding that plane maker Boeing received billions of dollars in unfair subsidies from the US government, industry sources said.

The report by WTO experts marks the latest stage in a row between the United States and European Union over unfair and illegal support for each other's planemakers in a market for large passenger aircraft worth over USD 1.7 trillion.

The WTO litigation has been running since 2004, and both sides periodically call for negotiations to settle the row.

The Boeing report is confidential and will not be published for several weeks or months, but its European rival Airbus said last week it would show that the US manufacturer had received massive illegal subsidies.

An interim report in September, also confidential, led to a welter of claims and counter-claims.

A WTO spokesman declined to comment, or even confirm that the report would be issued on Monday, citing confidentiality.

WTO experts have already found that Airbus received illegal subsidies from European governments, and both sides have appealed that ruling, with the WTO's appellate body now expected to announce its findings later this year.

Boeing says the research and development grants it received pale into insignificance besides the support for Airbus, some of which amounted to export subsidies that are completely illegal under WTO rules.

In the Airbus case WTO judges found that the company had only been able to launch a series of passenger jets thanks to the government support and called for an immediate end to the export subsidies.

Airbus says the findings in the Boeing report completely undermine its US competitor's business model.

The findings in the related cases could colour a decision in the coming weeks by the US Air Force on whether to award Boeing or Airbus parent EADS a USD 25-50 billion contract for refuelling tankers.

Both have support in the US Congress as they would assemble them in America.

While both companies argue about how many billions of dollars the other received, and what percentage of claims were backed or rejected by WTO judges, both have an interest in clarifying the rules for how governments can facilitate the development of new aircraft in a fair manner.

It could take until much later this year for the appeals process in both cases to run its course, but the two governments -- aware that Brazil, Canada, China, India, Japan and Russia are eyeing the market -- are eventually likely to sit down and negotiate a settlement.