WTO rules EU can slap tariffs on $4B of US goods

Trade body cites Boeing in handing out final decision in dispute

GENEVA — International arbitrators said Tuesday that the European Union can impose tariffs and other penalties on up to $4 billion worth of U.S. goods and services over illegal American support for plane maker Boeing. The move further sours trans-Atlantic ties at a time when the coronavirus has savaged economies.

The ruling by the World Trade Organization arbitrators, which could inflame Trump administration criticism of the Geneva-based body, amounts to one of the largest penalties handed down by the WTO.

It comes a year after another ruling authorized the United States to slap penalties on EU goods worth up to $7.5 billion — including Gouda cheese, singlemalt whiskey and French wine — over the bloc’s support for Boeing rival Airbus.

Now the EU can have its own turn at trade punishment, and has already been considering which American products it could target. A preliminary list that the bloc has released suggests it could go after a wide range of products, including frozen fish and shellfish, dried fruit, tobacco, rum and vodka, handbags, motorcycle parts and tractors.

In the past in trade disputes, the EU has sought to roughly match products affected by previous American sanctions — such as by hitting U.S. distillers if French wines were targeted. The bloc could aim for areas where Boeing planes or parts are made.

The latest WTO decision cannot be appealed and puts the final word on a standoff dating to 2006. It is just one part of a string of long-running disputes between the two plane-making giants at the WTO. And it sets the stage for what could become intense negotiation between the EU and U.S. to end what could become tit-for-tat sanctions.

The arbitrators were tasked with setting a dollar value in sanctions such as tariffs that the EU could impose after the WTO’s appellate body found last year that Boeing had received at least $5 billion in subsidies that were prohibited under international trade rules.

The United States had argued that the illegal support merited no more than $412 million in penalties, while the EU had countered that it deserved nearly $8.6 billion. The award in essence was nearly 10 times more than what the U.S. had claimed, and under half what the EU wanted.

The EU had argued that tax breaks for Boeing from Washington state, which is home to major manufacturing operations, unfairly harmed Airbus jets in the large single-aisle civil aircraft market — namely the A320neo and A320ceo aircraft. The U.S. argues that those tax breaks ended this year, eliminating any basis for the award.

U.S. Trade Representative Robert Lighthizer said the decision “doesn’t really authorize any action on their part” because Washington state has already repealed the tax breaks that the WTO deemed illegal. “Our view is that we’re in compliance,” Lighthizer said.

The WTO arbitrators said that the lifting of the tax breaks was not enough to prevent the award in favor of the EU.