The World Trade Organization (WTO) has allowed the United States to levy duties on European exports totaling $ 7.5 billion per year in response to EU subsidies for the aircraft manufacturing concern Airbus SE. The EU will be ready for a response, said European Commissioner for Trade Cecilia Malmström.
The EU-US dispute over subsidies for aircraft manufacturers Airbus and Boeing has been going on for more than ten years.
The amount approved by the WTO is the largest in the history of decisions taken by the organization – it is twice as high as the previous record ($ 4.04 billion) set in 2002. The organization’s final decision opens a new front in the trade war for the administration of US President Donald Trump, writes Dow Jones, who believes this decision is indicative of the fact that it was made in favor of Trump, who threatened to pull the States out of the WTO. The decision will enter into force later in October.
Earlier, the WTO recognized the US subsidies for Boeing as unlawful, and in the first half of next year should decide on the volume of US exports for which the EU will be able to introduce new duties.
The WTO decision will be a test of strength for relations between the US and the EU, which in the past have overcome disagreements without the introduction of mutual duties, experts interviewed by Dow Jones note. EU authorities previously suggested that the States settle mutual claims without imposing tariffs, but Washington demanded that Brussels comply with WTO regulations.
Trump will have to determine which European exported goods will be taxed by November 1. Earlier, the United States announced the possibility of introducing new duties for Airbus aircraft and their components, wine and other alcoholic beverages LVMH, Remy Cointreau, Pernod Ricard and Diageo, as well as Christian Dior and Hermes leather products.
Earlier, Bloomberg sources reported that Trump plans to use the so-called “carousel”, that is, regularly changing the list of European goods subject to new duties. This approach is expected to increase trade uncertainty and cause maximum damage to European business.
Malmström called the future US tariff decision “shortsighted and counterproductive.” Both the EU and the United States were found guilty by the WTO dispute settlement system in continuing to provide certain illegal subsidies to their aircraft manufacturers, she recalled. Mutual countermeasures will only harm businesses and citizens on both sides of the Atlantic, as well as global trade and the aviation industry, the European Commissioner warned.
The official recalled that the European Commission constantly informed the United States of the EU’s readiness to work with them on a fair and balanced solution for the aviation industry. “The aviation sector is one of the most challenging industries in the world in terms of development, production and financing,” the statement said. “The industry’s specifics require comprehensive subsidizing disciplines so that all players compete on equal terms,” she said.
The European Trade Commissioner recalled that in July the EU shared with the US specific proposals on a new aircraft subsidization regime and on how to promote existing compliance obligations on both sides. So far, the US has not responded.