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14 October 2019

EU seeks to halt US tariffs over Airbus aid in last-gasp plea

The World Trade Organisation (WTO) is due to give final approval for US retaliation in the Airbus case this week, allowing tariffs to kick in as planned.


The European Union made a last-ditch appeal to the US to refrain from triggering retaliatory tariffs over illegal subsidies to Airbus, warning of economic harm to both sides and repeating a call for a negotiated solution, reported Bloomberg.

European Trade Commissioner Cecilia Malmstrom told her US counterpart, Robert Lighthizer, that his plan to hit $7.5 billion of EU goods ranging from planes to whiskey with duties would compel the EU to apply countermeasures in a parallel lawsuit over market-distorting aid to Boeing.

“I strongly believe that imposing additional tariffs in the two aircraft cases is not a solution, it would only inflict damage on businesses and put at risk jobs on both sides of the Atlantic, harm global trade and the broader aviation industry at a sensitive time,” said Malmstrom.

The trans-Atlantic dispute over aircraft aid risks fraying a trade truce struck between the US and EU in July 2018. At the time, both sides pledged to try to scale back commercial barriers and avoid a repeat of tit-for-tat tariffs that began with President Donald Trump’s duties on European steel and aluminium on the US national-security grounds.

The WTO cases over subsidies to Airbus and Boeing are 15 years old, because of the calendar, the US is entitled to strike first and the EU would follow suit sometime in 2020.

Malmstrom gave no sign in her letter to Lighthizer that an idea floated in some EU circles for quicker European retaliation is gaining ground. The idea weighed was to hit back by invoking an unrelated, older WTO case against a now-defunct US tax break given to companies, including Boeing, via subsidiaries known as foreign sales corporations.

Instead, Malmstrom said the EU’s planned countermeasures of $12 billion would be applied when the time comes on the parallel Boeing case.




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