WTO okays US$7.5b fine in Airbus subsidy case
THE UNITED States got the green light Wednesday to impose US$7.5 billion in new tariffs on the European Union, a move that would open a new chapter in the global trade wars dragging down the world economy.
The World Trade Organization, WHO, said the US can impose the tariffs as retaliation for illegal aid that the 28-country EU gave to plane-maker Airbus as it competed with American rival Boeing, culminating a 15-year stand-off.
Stock markets around the world, which were already down, on concerns for the world economy, added to their losses on the news.
The US had prepared for Wednesday’s ruling and already drawn up lists of the dozens of goods it would put tariffs on. They include EU cheeses, olives, and whiskey, as well as planes, helicopters and aircraft parts in the case – though the decision is likely to require fine-tuning of that list if the Trump administration agrees to go for the tariffs.
The tariffs can take effect no earlier than mid-October because a key WTO panel needs to formally sign off on them first. But they will likely have an impact on agricultural and other sectors of the European economy, at a time when other tariff battles have dented global trade growth.
Wednesday’s award follows a WTO ruling in May 2018 that the EU had illegally helped Airbus with subsidies.
However, it does not end the long-running trans-Atlantic dispute over aircraft: WTO arbitrators are expected to rule next year about how much the EU can impose in tariffs following a separate decision that went against Boeing.
The EU’s top trade official said the bloc would prefer to reach a settlement with the United States to avoid a tariff war – but it will respond if US President Donald Trump imposes new duties on EU products.
EU Trade Commissioner Cecilia Malmstrom said a tariff war “would only inflict damage on businesses and citizens on both sides of the Atlantic, and harm global trade and the broader aviation industry at a sensitive time”.
The award is the largest among about two dozen at the WTO since it was created nearly 25 years ago.
“We have lost a matter under WTO law,” German Chancellor Angela Merkel acknowledged. “This means it’s not some sort of arbitrary question but a verdict according to international law that now weighs on Airbus, one must sadly say,” she told reporters in Berlin. “We have to see how the Americans will react now.”
The WTO in May 2018 found that EU “launch aid” for Airbus had resulted in lost sales for Boeing in the twin-aisle and very-largeaircraft markets. The ruling centred on Airbus’ 350XWB – a rival of Boeing’s 787 – and the double-decker A380, which tops the Boeing 747 as the world’s largest commercial passenger plane.
The case itself dates back to 2004.
The US$7.5-billion award represents a fraction of EU exports to the United States, which last year came to US$688 billion.