Earlier this week the Appellate Body of the WTO reversed a panel report and found that seven Washington state tax measures did not amount to a prohibited subsidy to Boeing.
The EU had alleged that the state tax measures were conditioned or contingent upon Boeing’s use of domestic fuselages and wings — instead of imported ones. This is considered by the USTR as a complete victory in the segment of the long-running WTO litigation concerning Airbus and Boeing. It probably is.
This case is particularly interesting because it considers the validity of state or sub-national units as being subject to the subsidy disciplines of the WTO. Applying global trade rules to US states is often overlooked.
But more importantly my concern is that this ruling may actually be used against the U.S. in its recent action against China concerning some of its practices calling for domestic content. We’ll see.