EU Wins WTO Appeal against American Tax Breaks for Boeing

In any legal system, when the court of final appeal speaks on a matter, that is it. It’s over. Finished. Done. Apparently, someone needs to tell the US Congress. The World Trade Organization’s highest court, its appellate body, took the EU side over tax breaks the US gives to Boeing. The EU can now reimpose $4 billion in sanctions, and Congress is taking the view that sanctions are counter-productive and that the US isn’t going to change.

The case goes back to 1997, when the EU first filed a complaint against the tax breaks. The WTO agreed that the US was giving Boeing an unfair advantage that was contrary to the WTO treaty. Congress tried to fix things in 2000, but the EU brought a follow-up complaint claiming the US failed to adequately address the problem, phasing out the breaks through the end of 2006 rather than immediately. The WTO agreed that the problem wasn’t fixed.

According to Bloomberg, the EU claims, “Boeing pocketed at least $168 million in 2004 from the export credits, one of several rebates that allowed the aircraft maker to reduce its tax burden to $140 million from $686 million, its annual report shows. Its rebate was $115 million in 2003 and $195 million in 2002. The company stands to gain $750 million over the next decade.”

Now, the US has 90 days to act, or Europe can impose retaliatory sanctions on US agricultural goods, textiles, industrial products, electronic products, paper products, jewelry and steel. One would think that people in congress whose constituents will be adversely affected by this would try to resolve the problem. That is giving American legislators too much credit.

“If sanctions are resumed, they’ll only disrupt our bilateral economic relations. I doubt Congress will revisit this legislation,” said Senator Charles E. Grassley (R-IA) chairman of the Senate Finance Committee. Since the “transition” period ends on December 31, Congress will merely let the clock run rather than vote to obey the law of nations. People on the Hill hope the US Trade Representative can negotiate a deal with the EU. Maybe when farmers, weavers, and steelmakers find out that the EU is taxing them to make up for Boeing’s breaks, that will change. It shouldn’t have to come to that, though.

The Danish flag appears here as a protest against the violence being done to the free press of that country and elsewhere by those offended by some cartoons of the Prophet Muhammed, peace be unto him. A perceived insult is not an excuse for intimidation and violence, even in the name of the Creator. One cannot insult God, only small-minded men who falsely claim to speak for Him. © Copyright 2006 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

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