The World Trade Organisation has reversed a ruling against a tax incentive for the production of the Boeing 777X in Washington state, handing a blow to the European Union in its a long-running dispute with the United States over aerospace subsidies.

The WTO's latest ruling goes against a decision last November that one of the tax amendments applying in Washington state relating to Boeing's 777X programme was inconsistent with the existing Subsidies and Countervailing Measures (SCM) Agreement.

The appellate panel found that the subsidy did not prompt Boeing to favour domestic over imported goods, and that the business and occupation aerospace tax is not a prohibited subsidy under the SCM Agreement.

The panel did not make any recommendations to the dispute, which relates to legislation enacted in Washington State over three years ago that amended and extending various tax incentives for the aerospace industry.

In a statement, Boeing general counsel J. Michael Luttig called the ruling "a sweeping and clean win for the United States".

He adds: "The WTO has rejected yet another of the baseless claims the EU had made as it attempts to divert attention from the $22 billion of subsidies European governments have provided to Airbus and that the WTO has found to be illegal.

"No further appeal of today's decision is available to the EU."

In a statement, Airbus said that a separate review on the case has confirmed that the subsidies are "illegal and actionable causing massive harm to Airbus".

"Boeing illegal subsidies are still illegal and need to be removed," says Airbus executive vice president communications Rainer Ohler. "The 'game' is far from over."

Source: Cirium Dashboard