The US has been given 90 days to drop a special tax exemption for the giant aerospace company Boeing because it amounts to an unlawful subsidy.
The World Trade Organization (WTO) made the order after investigating a complaint from the European Union.
The tax cut was provided by the state of Washington in 2013 to ensure that wings for Boeing’s new 777X jetliner were made only there.
The tax cut was “prohibited” under its rules, said the WTO.
The WTO decided that the measure, giving Boeing a special and very low “business and occupation” tax rate, was unlawful because it hinged on the aeroplane company being required to use local rather than imported materials – the wings – which in turn would distort trade.
“The Panel has found that the European Union has demonstrated that the B&O aerospace tax rate for the manufacturing or sale of commercial airplanes under the 777X programme… is a …
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