The leaking begins. From Reuters:
An interim report released to the parties on Wednesday backed European complaints over some $17 billion of research contracts from NASA and the Pentagon and approximately $4 billion of tax breaks from Washington state, the source said.
The WTO found the aid "actionable" and called for it to be withdrawn but stopped short of labeling the state incentives "prohibited," which would require faster remedies, the source said. It also apparently dismissed complaints over property tax and other measures in Kansas.
ADDED: Some more details (from the U.S. side):
The World Trade Organization has found Boeing (BA.N) benefited from federal and other subsidies but to a much lower extent than its European adversaries suggest, two U.S. sources familiar with the case said.
Speaking on condition of anonymity after a Geneva trade panel issued a confidential interim report on a European Union counter-suit over aircraft subsidies, they said the WTO had found subsidies worth about $5 billion including $2 billion which have already been subject to an earlier settlement.
The $3 billion or so in new subsidies were mainly linked to historical payments provided to the U.S. planemaker by NASA, the sources said. The EU had argued NASA had helped Boeing by providing research contracts with too little in return.
Sources on both sides of the dispute agreed the EU had failed to make a charge stick that Boeing had received "prohibited" subsidies through incentives in Washington state.
Subsidies provided by the home state to most Boeing commercial production only rose to the level of "actionable" support, which do not require immediate remedies.
Sources disagreed over how much of the aid from Washington state fell into this category, with European sources saying the EU had won convincingly and a U.S. source saying the EU victory there was "infinitesimal".
"It is a repudiation of Europe's view that Boeing enjoyed subsidies anywhere comparable to what Airbus enjoyed in launch aid," a source close to the U.S. side of the case said.
NOW over to the EU side:
But a source close to the European side of the case, also speaking anonymously, sharply differed on how the ruling should be interpreted.
That person said the WTO report didn't quantify the total of illegal subsidies to Boeing, so $5 billion represents only part of the full amount ruled illegal.
And he said the damages to be paid over any given illegal subsidy are a much larger amount than the subsidy itself.
"Boeing is on the hook not for $5 billion, but for $25 billion in adverse effects," he said.
And the U.S. response:
The person close to the U.S. side of the case agreed that damages will generally far exceed the subsidy itself. But he insisted that the $5 billion in Boeing subsidies cited in the ruling is a figure directly comparable to the roughly $20 billion in loans to Airbus ruled illegal in the June WTO report.
"The $20 billion is the principal amount of subsidy that Airbus received and the $3 billion, leaving out the older FSC subsidy, is the amount found by this panel in its interim report for Boeing," he said. "That's an apples-to-apples comparison."
