Question

Is Boeing the beneficiary of prohibited subsidies because of the US military policy to buy "American"?

Answer 1

Yes, Boeing is the beneficiary of prohibited subsidies because of the US military policy to buy "American". It is a fact that a large percentage of Boeing’s business comes from U.S. defense contracts and the U.S. military is Boing’s largest customer. Thus Boeing gets indirect subsidies in the form of federal contracts (which are guaranteed every year for Boeing). It also gets direct subsidies in the form of tax breaks from state governments in USA. For example Boing received a $8.7 billion tax break from the state of Washington in exchange for setting up jobs there.

Many of the contracts awarded by U.S. military to Boeing also cover R&D (research and development) expenses and this ensures that Boeing can invest money that it has received from the defense contracts to develop and nurture new products. For instance in recent past U.S. military had awarded Boeing a $499 million deal that enabled Boeing to develop future air vehicles that can be used for the purpose of country’s defense.

In fact USA imposes high amount of tariff on foreign made jetliners and other air vehicles so that Boeing’s products remain most competitive in defense contracts. For example Canadian made jetliners are subjected to around 200% tariff and this largely helps Boeing.