The European Union is allowed to impose billions in punitive tariffs on the USA for illegal state aid for the aircraft manufacturer Boeing. The decided arbitrator of the World Trade Organization (WTO).
However, they fell far short of the expectations from Brussels: They approved punitive tariffs on US imports amounting to almost four billion dollars (3.4 billion euros) a year. The EU had claimed $ 8.6 billion. While the EU is penalizing the US economy, this means for consumers that goods imported from America such as ketchup and game consoles could become more expensive. The EU had already promised punitive tariffs on these and other products.
However, she wants to do without punitive tariffs for the time being, as the Vice President of the EU Commission, Valdis Dombrovskis, who is responsible for trade policy, said in Brussels: “We clearly prefer a negotiated solution.” It would be about avoiding EU punitive tariffs and abolishing US punitive tariffs in a similar case due to illegal Airbus aid. In the case, arbitrators had approved the US punitive tariffs on products from the EU in the amount of 7.5 billion dollars. The EU only wants to impose punitive tariffs if no agreement can be reached.
Instead of responding to the EU offer, Washington immediately threatened new measures. The aid had long since been abolished and there is no basis for retaliation, said US trade representative Robert Lighthizer. Tariffs based on a repealed measure contradict WTO principles and force the US to react. He didn’t say what exactly the United States is thinking about.
With the publication of their ruling on Tuesday, the arbitrators drew a preliminary line under a trade dispute that had lasted for more than 15 years. An appeal is excluded.
The EU could introduce the punitive tariffs before the US elections. She has to apply to the WTO Dispute Settlement Committee in Geneva, but acceptance is a matter of form. The application could only be rejected unanimously – only if the EU voted against its own application. The next regular meeting is on October 26th.
Industry representatives are pressing for quick punitive tariffs – only then would the EU have leverage to negotiate with the US about an end to all punitive tariffs, it said. This would also be necessary in the event of a change of government in Washington, because even a Joe Biden government would not give up its own punitive tariffs without consideration.
Airbus welcomed the verdict. Airbus fully supports the EU Commission in the implementation of measures that are necessary to create a level playing field and to reach a long overdue agreement, said the group with its control center in Toulouse in the south of France. Boeing claimed that the aid complained of had long since been discontinued. Airbus and the EU should now use their energies to find an amicable solution to the conflict. The EU has already offered Washington several negotiations to end all punitive tariffs. Washington had not yet responded to this.
The WTO arbitrators had already concluded in March 2019 that the USA had not stopped government aid to Boeing that had been complained about years earlier. Since then, arbitrators have been busy determining the amount of punitive tariffs allowed. The subsidies included research funds from the NASA space agency and tax breaks. The former American bestseller, the long-haul aircraft Boeing 787, called the Dreamliner, was also subsidized by the state.
A good 15 years ago, the EU and the USA sued each other at the WTO for aid to Airbus and Boeing. The US lawsuit against Airbus was closed a little faster. Because Brussels did not stop the subsidies complained of, arbitrators allowed the US to impose punitive tariffs on goods worth $ 7.5 billion a year in October 2019. That was the highest amount since the WTO was founded in 1995. The USA immediately waived tariffs of up to 25 percent on cheese, butter, wine, components for the aviation industry and other products from Europe. They mainly punished countries that supported Airbus: Germany, France, Spain, Great Britain.
The winning party in a trade dispute may levy punitive tariffs until the losing party has eliminated the subsidies in question. The EU has been asserting for months that all Airbus aid has been suspended and that the punitive tariffs must be stopped. She has called for a new assessment by the arbitrators, but her motion is not making any progress in the crisis-ridden WTO.