WTO clears US to target $7.5 billion of EU exports with tariffs

Signs indicate the regional origin of French wines in a shop in Los Angeles, California, USA, 04 October 2019. In a dispute over subsidies and other kinds of special financing that the European Union is providing Airbus, considered as disloyal competition to US manufacturers, the Trump administration received permission from the World Trade Organization (WTO) to raise tariffs on up to 7.5 billion US dollar of European products annually. [EPA-EFE/ETIENNE LAURENT]

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.

Malmstrom: 'We cannot do much to protect individual countries on the Airbus case'

EU Trade Commissioner Cecilia Malmström is no longer optimistic when it comes to avoiding US tariffs on goods, thanks to the result of the WTO Airbus case.

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.”

Europe launches last-ditch effort to avoid US tariffs

The European Commission has dangled the prospect of limiting its public subsidies to the US administration in an attempt to avoid further tariffs from Washington that could come as early as next month in the context of the Airbus-Boeing dispute.

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.

WTO allows US to hit EU exports with record tariffs over Airbus case

The World Trade Organisation authorised the United States on Wednesday (2 October) to impose tariffs on EU goods worth up to $7.5 billion (€6.8 billion), as a response to illegal subsidies given by European governments to aerospace giant Airbus.

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