The European Commission's regulation increasing tariffs on US exports to the European Union (EU) worth $4 billion will be soon published. The countermeasures, which took effect from November 10, have been agreed to by EU member states as the United States has not yet provided the basis for a negotiated settlement. The United States expressed disappointed over the EU action.
The World Trade Organisation (WTO) formally authorised the EU on October 26 to take such countermeasures against illegal US subsidies to aircraft maker Boeing.
The European Commission stands ready to work with the US to settle this dispute and also to agree on long-term disciplines on aircraft subsidies, the Commission said in a press release.
The countermeasures bring the EU equal footing with the US, with sizeable tariffs on each side based on two WTO decisions related to aircraft subsidies. They include additional tariffs of 15 per cent on aircraft as well as additional tariffs of 25 per cent on a range of agricultural and industrial products imported from the United States, thereby strictly mirroring the countermeasures imposed by the United States in the context of the WTO case on subsidies to Airbus, the press release from the European side said.
“The United States is disappointed by the action taken by the EU today. The alleged subsidy to Boeing was repealed seven months ago. The EU has long proclaimed its commitment to following WTO rules, but today’s announcement shows they do so only when convenient to them,” US Trade Representative (USTR) Robert E Lighthizer said in a statement.
The Office of the USTR is in negotiations with the EU with the hope of resolving this longstanding dispute relating to large civil aircraft.
In March 2019, WTO’s Appellate Body confirmed that the United States had not taken appropriate action to comply with WTO rules on subsidies, despite the previous rulings. Instead, it continued its illegal support of its aircraft manufacturer Boeing to the detriment of Airbus, the European aerospace industry and its many workers.
In its ruling, the Appellate Body confirmed that the Washington State tax programme continues to be a central part of the US ‘unlawful subsidisation’ of Boeing and found that a number of ongoing instruments, including certain NASA and US Department of Defence procurement contracts, constitute subsidies that may cause economic harm to Airbus; and confirmed that Boeing continues to benefit from an illegal US tax concession that supports exports (the Foreign Sales Corporation and Extraterritorial Income Exclusion).
In a parallel case on Airbus, the WTO allowed the United States in October 2019 to take countermeasures against European exports worth up to $7.5 billion. This award was based on an Appellate Body decision of 2018 that had found that the EU and its member states had not fully complied with the previous WTO rulings with regard to Repayable Launch Investment for the A350 and A380 programmes. The United States imposed these additional tariffs on October 18, 2019.