Jet spat: European Union wins right to hit US with tariffs

Jet spat: European Union wins right to hit US with tariffs

The European Union has won the right to impose tariffs on $4 billion in US goods in retaliation for subsidies granted to planemaker Boeing BA.N under a World Trade Organization (WTO) ruling on Tuesday.

In 2004, USA claimed that Airbus, jointly owned by Germany, France, Spain and Britain's BAE Systems, had received $22 billion (€19.4 billion) in illegal subsidies, resulting in an economic benefit of more than $200 billion.

Tuesday's decision follows a ruling a year ago that allowed Washington to impose tariffs of $7.5 billion on European Union goods over state support for Europe's Airbus.

European Union trade commissioner Valdis Dombrovskis said the European Union will work with the U.S.to decide on the next steps.

Although officials from the USA and the EU have each voiced their desire to reach a negotiated settlement, European Union trade commissioner Phil Hogan warned in July of an escalation of the trade war between the EU and the US after he said Washington had rejected overtures to settle the dispute.

The result parallels an earlier ruling against the EU allowing USA tariffs that for the past year have increased the price of many European products sold here, including Airbus jets. "Any imposition of tariffs based on a measure that has been eliminated is plainly contrary to WTO principles and will force a USA response". In the light to rebalance the trade relationship, President Trump has signaled implementing the tariffs on the EU. After that, the ruling may spur transatlantic negotiations to try to reach a settlement of the 16-year-long dispute over government subsidies to airplane manufacturers.

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The World Trade Organisation (WTO) has today announced its decision on the European side of the long-running subsidies dispute.

The WTO arbitrator did not take into consideration Washington State's repeal of the offending tax provision, limiting its review to the impact from 2012 through 2015.

"Both sides are waiting until the election is settled to re-engage, and depending on the outcome, we could see a ratcheting up of tensions before any potential deepening of trade ties", Moehr told the Times. Meanwhile, EU filed a counter suit alleging that Boeing had received $23 billion in "trade-distorting" subsidies in the US.

In October 2019, 15 years into the case, the USA finally slapped tariffs of 25% on a series of non-aerospace goods including European wine, whiskey and cheese and a 10% tariff on European-built Airbus jets.

Consuming thousands of pages of testimony and an estimated $100m in costs since 2004, the aircraft spat has tested the resolve of the WTO, which is busy selecting a new leader.

Reuters reports that while the bloc could enact the sanctions from after a WTO meeting on 26 October, analysts do not expect it to slap on the tariffs until after the United States election. "Our strong preference is for a negotiated settlement", said Commission executive vice-president for Economy, Valdis Dombrovskis, who is also responsible for Trade.

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