EU gets WTO green light for Boeing tariffs

Brussels calls for truce after ruling

The World Trade Organization authorised on Tuesday the European Union to impose steep retaliatory tariffs over US aid for Boeing Co, a year after permitting Washington to sanction Brussels for its support of Airbus SE.

In the latest development in the 16-year saga between Washington and

Brussels over support for their aircraft manufacturers, the EU received the green light to impose $3.99 billion in tariffs on US goods and services.

The WTO determined that that amount was “commensurate with the degree and nature of the adverse effects determined to exist” from US support for Boeing considered to be in violation of international trade rules, according to the 121-page arbitrator’s report.

According to a list of targets seen by AFP, the European Union is expected to impose tariffs on aircraft made in the United States, along with tractors, sweet potatoes, peanuts, frozen orange juice, tobacco, ketchup and Pacific salmon.

The EU and the United States accuse each other of having provided illegal state aid to their respective aircraft manufacturers, and both brought claims before the WTO’s Dispute Settlement Body (DSB).

Following Tuesday’s decision, the EU must request permission from the DSB to apply the decision — something it could do at the body’s next meeting on October 26, a week before the US presidential election.

Last year, the WTO authorised a record $7.5 billion in US sanctions against European goods and services over the bloc’s assistance to Airbus, also considered improper under international trade regulations.

Washington then imposed punitive tariffs of 25% on EU products such as wine, cheese and olive oil. The 10% tariff on Airbus planes was hiked to 15% in March.

While several EU leaders have been calling for imposing the tariffs immediately if Washington does not agree to drop its levies, few expect it to do so.

One industry source however expects the WTO ruling to “open the door for negotiations”.

Given the crisis the airline industry now finds itself in and the effect that is having on Airbus and Boeing, a long drawn-out battle in which tariffs raise the prices of aircraft does not serve the interests of either the EU or the United States.

After the ruling the EU quickly called for negotiated settlement.

“I have made it clear that my strong preference is for a negotiated settlement with the US, avoiding harmful rounds of measures and countermeasures,” European Commision vice president Valdis Dombrovskis said.

“Our suggestion is that the US withdraws the tariffs they imposed as a consequence of the Airbus ruling,” the former Latvian prime minister added.

“The EU will then refrain from exercising our retaliation rights, and we can wipe the slate clean, working together to find common ground across a range of areas,” he said.

“The United States is determined to find a resolution to this dispute,” US Trade Representative Robert Lighthizer said. “We are waiting for a response from the EU to a recent US proposal and will intensify our ongoing negotiations with the EU to restore fair competition and a level playing field to this sector.”