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State incentives provided to companies may be subject to international trade requirements

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A recent determination by the World Trade Organization (WTO) serves as a reminder that incentives that states provide to attract businesses are subject to potentially restrictive international trade requirements. In late 2016, a WTO panel determined that a conditional tax incentive that Washington was providing to Boeing was a prohibited subsidy under the Agreement on Subsidies and Countervailing Measures (SCM Agreement) because Boeing was required to use domestic goods. States and companies that receive substantial incentives should be aware of the WTO requirements.