Don’t let issue over Boeing spur trade war

The United States and the European Union have been drifting apart for two decades, and issues that used to be treated as friendly family quarrels, like different trade policies or different commitments to a common defense, have turned into major disagreements.

But in a world defined by strong challenges to the international rules on which both rely, it is clear that the United States and the EU need to stand together wherever possible.

Unfortunately, a recent pair of rulings by the World Trade Organization threatens to ignite a new tariff war between the two. That would be bad for both and for the rest of the free world that depends on the rules, which are being threatened by China, Russia and Iran.

Last year, the WTO found that the EU had given illegal production subsidies to Airbus worth $7.5 billion to enable it to compete with Boeing, and authorized the United States to collect a like amount in retaliatory tariffs on European goods.

The U.S. has begun imposing new tariffs on goods such as Scotch whiskey, but has not fully exploited the ruling in its favor.

On the other hand, the WTO also recently found that Washington state had given $4 billion in illegal tax breaks to Boeing and authorized the EU to impose a similar amount of tariffs on the United States.

These are hardly crippling penalties in a two-way trade relationship that reached $1.3 trillion in 2018, and one could hope that both sides would find an amicable way to settle the remaining issues and waive the penalties, especially because they clearly need to be pulling together against the new threats to world order.

That does not seem to be the case. The United States

Trade Representative’s office says the U.S. won the subsidy battle because its award was larger, and Europe should impose no new tariffs at all. The EU’s new trade commissioner, Valdis Dombrovskis, replied that the U.S. had to drop its punitive tariffs before Europe would drop its new authority for higher tariffs.

This may be the normal Kabuki posturing that often precedes serious negotiations. But it also is a possible prelude to a complete breakdown in negotiations.

The EU has developed a history of unyielding rigidity in its foreign relations that reflects the difficulty it has in getting unanimous consent from its 27 members.

It is worth noting that Boeing this year agreed to give up the $100-million-a-year tax break it was getting from Washington state, and the law granting that break was repealed.

But even though Airbus has said it is giving up production subsidies, the EU has not renounced or rescinded its legal authority to provide them. So there is a continuing, if latent, unresolved issue.

What raises this from the level of a family spat to a serious threat to better U.S.-EU relations is the prospect of a new tariff war that will make it harder for both sides to find common ground where it matters most. It’s time to move on from the political intricacies built into trade retaliation measures.

Settle this matter quickly.