IX - CITY OF WICHITA INDUSTRIAL REVENUE BONDS (IRBS) – SPECIFICITY

Summary

859. We next turn to the United States' appeal of the Panel's finding that the IRB subsidies provided by the City of Wichita are a specific subsidy within the meaning of Article 2.1(c) of the SCM Agreement. We begin, in section A, with a brief background on the IRBs issued to Boeing and Spirit, followed by a summary, in section B, of the Panel's findings in respect of this measure. In section C, we assess the United States' claim on appeal.

Background

860. As a general matter, IRBs are issued by the City of Wichita to the general public on behalf of a qualifying private entity, the proceeds of which are used to purchase, construct, or improve commercial or industrial property for that entity. The City of Wichita holds title to the property during the term of the IRB, and leases the property to the private entity in exchange for rent payments sufficient to cover the payment of principal and interest on the IRB to the public bondholders. During the term of the IRB, the private entity benefits from exemptions from certain interest rate, property, and sales taxes. At the conclusion of the IRB term, title to the property transfers to the private entity involved. The IRB scheme operated somewhat differently for Boeing, and subsequently Spirit (which acquired Boeing's Wichita division in June 2005), because the IRBs at issue, rather than being purchased by the public, were purchased by Boeing and Spirit themselves.