- Associated Press - Monday, November 28, 2016

OLYMPIA, Wash. (AP) - The World Trade Organization has ruled that Boeing received illegal tax breaks from Washington state to keep 777X production in the state.

What happens next isn’t entirely clear.

The Chicago-based company and the European Union, which backs Boeing’s European rival Airbus, both claimed the ruling as a victory in a longstanding battle for contracts between the two aerospace giants.

The WTO found the support Washington state promised to give Boeing from 2024 to 2040 amounted to “prohibited” subsidies. The WTO ruled that $5.7 billion in subsidies were illegal, out of a total $8.7 billion in measures it reviewed.

Here is reaction from Washington state officials:

-Gov. Jay Inslee said in a statement:

Three years ago, lawmakers passed, on a bipartisan basis, a package of legislation that resulted in the Boeing 777X being assembled in Washington state, ensuring the health of the Washington aerospace industry and sustaining jobs in our state. That was the right thing to do for our state’s economic future and it still is.

We will continue to work with the Office of the U.S. Trade Representative in Washington, DC, to determine how to respond to the WTO Panel report. It is important to note that the WTO Panel rejected the EU’s arguments with respect to six of the seven challenged tax measures. Moreover, it is too early to tell what actions the state might undertake in response to the Panel report as it is likely to be appealed.

Washington State is a great place for aerospace companies to do business. Washington is home to more than 88,300 skilled aerospace workers and a cluster composed of over 1350 companies, making our industry one of the most robust and dynamic in the world.

-Republican Senate Majority Leader Mark Schoesler said that Airbus’s complaints about the subsidies are “the pot calling the kettle black.”

“They’re not receiving extremely favorable treatment? Hardly,” he said.

-Sen. Reuven Carlyle, a Democrat from Seattle who sponsored the 2013 tax incentive bill when he was a state representative, said the WTO “categorically rejected the overwhelming majority of the European Union’s case.”

He said that the element of the ruling related to Washington state “is pretty modest compared to the central argument.”

“If that’s the strength of their entire case compared to the U.S. case against the European Union, that’s little league versus the majors in terms of scale,” he said.

Carlyle said that if the ruling were upheld on appeal and there wasn’t some type of negotiated solution, the Legislature has options, adding that “the ability to continue to solidify Washington state’s role with the aerospace industry is in no way compromised.”

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