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WTO To Hear EU-Washington State Tax Dispute

by Mike Godfrey, Tax-News.com, Washington

26 February 2015


The World Trade Organization's (WTO) Dispute Settlement Body (DSB) established a panel on February 23, 2015, to study a complaint by the European Union against the United States over alleged tax incentives for the manufacturing of large commercial aircraft.

Earlier. the EU said that, in November 2013, Washington State vastly expanded and amended its existing aerospace tax incentives program as part of its efforts to induce Boeing to manufacture its new 777X model of large civil aircraft in Washington State. According to the EU, the expanded program effectively provides "billions of dollars" in additional subsidies (as defined by Articles 1 and 2 of the WTO's Agreement on Subsidies and Countervailing Measures) to Boeing.

The EU said the expansions and amendments also made the continuing availability of such tax incentives, in whole or in part, contingent upon siting production of the wings and final assembly for a new commercial aircraft model or variant in Washington State, and maintaining all wing assembly and final assembly of such commercial aircraft exclusively in Washington State.

The United States maintains that its measures are fully consistent with its obligations under the relevant WTO agreements. Consultations between the two parties failed to resolve the dispute.

TAGS: tax | tax incentives | aviation | World Trade Organisation (WTO) | agreements | manufacturing | trade disputes | United States | tax breaks | trade | Europe

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