Court Brief of Defensive Oral Argument Group

Liz Jagerson

Ryan Lurquin

Tom Laventure

Yabing Yang

Jena Holmes

Court Brief of Defensive Oral Argument Group

Our primary argument states that Boeing has performed unfair trading practices creating an unfair playing field for its competitors. Since 1992, direct and indirect government support to the Large Aircraft Industry (LCA) has been regulated through a bilateral EU-US Agreement. EU continuously followed all the restrictions under the agreement. However, compliance by the US was less than satisfactory, particularly by disguising large subsidies to Boeing. An example of this would be when Washington State granted Boeing unprecedented and prohibited production subsidies for their 787 Aircraft.  

In 2004, US unilaterally withdrew them selves from the EU-US Agreement and filed a World Trade Organization (WTO) law- suit against EU. The major complaint regards how EU co- financed research and development for Airbus. However, this form of support provided by EU was all compliant under the EU-US bilateral agreement. It was actually the US providing inappropriate subsidy to Boeing.

The US government subsidized Boeing through various means such as: Military sales, Federal tax breaks, and grants disguised as research contracts. The WTO found that from 1989- 2006 Boeing received up to $5.3 billion worth of illegal subsidies. The US subsidies were violations of the Subsidies and Countervailing Measures (SCM) agreement. The SCM agreement was violated under provisions 5 and 6 because a significant amount of Boeings subsidies lead to material injury, adverse effects and serious threat of prejudice to the EU LCA.

Illegal tax subsidies were given to Boeing partners both inside and outside the US, which involves exportation; when authorized, this act is illegal with the WTO. 

Our second argument states that the actions of Boeing Company were immoral. Boeing has demonstrated on numerous occasions its lack of moral consciousness and its inability to distinguish from right and wrong, and even legal and illegal, behavior. Boeing’s immoral behavior, as evidenced by its acquiring of illegal income tax cuts and illegal subsidies, its immoral exploitation of state establishments and its manipulation of labor unions, is deplorable and violates the WTO’s SCM Agreement.

 As of 2012, Airbus has lost up to $42 billion in sales as a result of the unfair and immoral advantage obtained by Boeing via its illegal and immoral behavior. The National Labor Relations Board argued that Boeing violated federal labor law because the company moved its production to South Carolina in retaliation against the union in Washington. This move will take away many jobs for employees in Washington, increasing the states unemployment. In efforts to obtain a Boeing plant to ensure employment for citizens, states undergo subsidy and tax break-bidding wars. In December 2013, Missouri approved a $150 million a year subsidy to lure Boeing there. Additionally, South Carolina offered $900 million in tax breaks and other incentives and $33 million for worker training upon the agreement to establish a plant in South Carolina. Washington signed a package of tax breaks and incentives aimed at keeping tens of thousands of Boeing jobs in the Puget Sound region valued at $8.7 billion over the next 27 years. The state of Washington is attempting to increase the employment rate for their state. This amounted to the single largest tax break any state has ever given a single company. Boeing has also received a research and development tax credit from the federal government bringing its income tax to a mere 29%. Boeing has also received illegal support from the Export-Import bank, or “Boeing’s Bank” that provide subsidized loans to foreign airlines if they purchase Boeing products.  The negative impacts of both the illegal subsidies and illegal tax cuts obtained by Boeing tricked all the way down to everyday tax paying consumers. It is estimated that Boeing received $5.3 billion of granted subsidized taxpayer money. The actions of Boeing are both immoral and illegal. Its actions are undeniably punishable by the WTO.