The World Trade Organisation formally authorised the US on Monday (14 October) to impose tariffs on up to $7.5 billion worth of EU exports after an arbitrator’s decision over subsidies to planemaker Airbus.
The WTO’s dispute settlement body, made up of representatives from its 164 members, cleared Washington to take countermeasures against the EU and Airbus-producing countries Britain, France, Germany and Spain.
The tariffs are expected to enter into force on Friday (18 October).
Washington said it will impose 10% tariffs on Airbus planes and 25% duties on a range of products, including French wine, Scottish whiskeys and cheese from across the continent.
The authorisation was a formality after a WTO arbitrator awarded a record right to retaliate over illegal subsidies this month. It would only have been denied if all WTO members present voted against. The meeting lasted less than 20 minutes.
U.S. trade ambassador Dennis Shea told the meeting that Washington still preferred a negotiated solution.
“But that can only happen if the EU genuinely terminates the benefits to Airbus from current subsidies and ensures that subsidies to Airbus cannot be revived under another name or another mechanism,” he told the meeting.
The EU delegation told the meeting that it had “serious concerns” and that US tariff measures were short-sighted.
The WTO has found that both Airbus and its US rival Boeing received billions of dollars of illegal subsidies in a pair of cases that have run for 15 years. Adjudication in the Boeing case is expected early in 2020.
The Commission had offered a negotiated solution to avoid the mutual imposition of tariffs, but the US declined the proposal.
Commissioner for Trade, Cecilia Malmstrom, insisted on Monday that “tariffs are not good for the economy, or for consumers” and warned that both sides “risk escalating a situation that is unfortunate.”
She said that it would be better if Brussels and Washington sit down and review the subsidies they provide to their industries and avoid the punitive measures.
Malmstrom wrote last week to U.S. Trade Representative Robert Lighthizer urging him to start negotiations to find a settlement of the Airbus and Boeing cases, adding that resorting to tariffs was not a solution.
“It would only inflict damage on businesses and put at risk jobs on both sides of the Atlantic, harm global trade and the broader aviation industry at a sensitive time,” she wrote in a letter seen by Reuters.
