Boeing Subsidies Merit EU Tariffs on $4 Billion in U.S. Goods, WTO Rules -- 3rd Update
By Josh Zumbrun and Daniel Michaels
The World Trade Organization said the European Union may impose
tariffs on $3.99 billion in Boeing Co. jets and other U.S. goods
annually as part of a long-running trade dispute.
Tuesday's ruling clears the way for the EU to respond to tariffs
that the trade body last October authorized the U.S. to impose on
$7.5 billion in Airbus SE jets and other imported European
products, the largest arbitration award in WTO history.
EU officials have said they hope to negotiate a settlement with
the U.S., and many observers expect Europe to refrain from levying
tariffs quickly. The bloc last year said it had prepared a
preliminary list of U.S. products to target in retaliation, if
The jetliner dispute is the longest since the WTO's inception.
In 2004, the U.S. took European countries to the WTO over subsidies
to Airbus, and Europe responded soon after with a case against U.S.
support for Boeing.
WTO rulings since then have found that both sides provided
prohibited subsidies, but Europe did so to a greater extent.
"The U.S. is in a strong position, since its award is almost
twice the EU's, but $4 billion is not to be sneezed at," said Bill
Reinsch, a senior adviser at the Center for Strategic and
International Studies in Washington. "It sets the stage for a
negotiation, but there is a long way to go."
EU Trade Commissioner Valdis Dombrovskis said on Twitter that he
would immediately re-engage with the U.S. "Our strong preference is
for a negotiated settlement," he said. "Otherwise, we will be
forced to defend our interests & respond in a proportionate
Airbus said it supports any action the EU takes. The company is
"ready to support a negotiation process that leads to a fair
settlement," said Chief Executive Guillaume Faury. "It is time to
find a solution now so that tariffs can be removed on both sides of
U.S. Trade Representative Robert Lighthizer, the top U.S. trade
negotiator, said the EU has "no lawful basis to impose tariffs"
because the subsidies for Boeing have already been repealed. He
suggested the U.S. would consider retaliating if Brussels moved
forward with tariffs. "Any imposition of tariffs based on a measure
that has been eliminated is plainly contrary to WTO principles and
will force a U.S. response," he said.
European officials say they can levy an additional $4 billion in
tariffs based on a previous finding of other U.S. violations, which
would be on top of the $3.99 billion awarded on Tuesday.
Mr. Lighthizer said that the U.S. would prefer to negotiate a
solution and is "waiting for a response from the EU to a recent
U.S. proposal and will intensify our ongoing negotiations with the
EU to restore fair competition and a level playing field to this
Boeing said it is disappointed that Airbus and the EU are
seeking tariffs on the U.S. "Rather than escalating this matter
with threats to U.S. businesses and their European customers,
Airbus and the EU should be focusing their energies on good-faith
efforts to resolve this long-running dispute," the company
Helping broker a deal over government aid for jetliners would be
a crucial victory for the WTO's efforts to build credibility as a
global arbitrator, even as the coronavirus pandemic amplifies
already-simmering trade spats.
The pandemic-driven decline in air travel has made many airlines
unwilling or unable to take most new aircraft deliveries, reducing
the current and potential impact of such disputes.
Both the U.S. and the EU have taken steps in recent months to
defuse their dispute, which spawned a series of claims, WTO
rulings, concessions and appeals that have colored broader trade
relations between them and led to tariffs on goods ranging from
cheese to industrial parts.
Boeing earlier this year stepped away from tax breaks provided
by Washington state for 787 production. The company recently said
it planned to end assembly of the plane in the state and move it to
South Carolina. Airbus announced a deal in July with Spain and
France to change some financial-support agreements.
Both sides now maintain they are in full compliance with WTO
The dispute has become an element of the Trump administration's
trade talks with Europe. The two sides have been in formal
negotiations since 2018 over a range of issues but have made little
Many other industries have been pulled into the aircraft dispute
after the U.S.'s tariffs last year affected a range of cultural
products from Europe such as wines, liquors, olives and
"Instead of further escalation, we hope the U.S. and the EU will
come back to the negotiating table and agree to the immediate and
simultaneous removal of tariffs," said the Distilled Spirits
Council of the U.S., a trade group representing distillers.
--Doug Cameron contributed to this article.
Write to Josh Zumbrun at Josh.Zumbrun@wsj.com and Daniel
Michaels at email@example.com
(END) Dow Jones Newswires
October 13, 2020 12:32 ET (16:32 GMT)
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