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US proposes more tariffs on EU goods in Airbus-Boeing dispute

Jul 02 2019 13:06
Sarah McGregor and Jenny Leonard

The US has added more European Union products to a list of goods it could hit with retaliatory tariffs in a long-running trans-Atlantic subsidy dispute between Boeing and Airbus.

The Trade Representative’s office in Washington on Monday published a list of $4bn worth of EU goods to target in retaliation for European aircraft subsides. The products range from cherries to meat, cheese, olives and pasta, along with some types of whiskey and cast-iron tubes and pipes.

This adds to a list of EU products valued at $21bn that the USTR published in April, according to the release.

The EU has a similar case pending against Boeing and has readied retaliatory tariffs of its own. Though the dispute predates President Donald Trump’s efforts to overhaul America’s big trading relationships, the timing of the latest punitive measures will add to already strained ties between Washington and Brussels.

The airplane subsidy spat and the tariffs both sides are threatening contrast with the Trump administration’s other high-profile trade moves because they’re playing out under WTO rules rather than by unilateral White House authority. Under Trump, the US has called for sweeping changes at the Geneva-based WTO and is currently blocking nominees to its appeals panel - a move that may paralyse the institution’s dispute-settling capacity by year end.

The latest US targets were identified following a two-day hearing in Washington in May when 40 stakeholders made their cases about the countermeasures. The USTR said a public hearing on the proposed additional $4bn worth of products will be held on August 5.

The USTR estimates the EU subsidies to Airbus cause approximately $11bn in economic harm to the US annually. The World Trade Organisation has found the EU subsidies violate international trade rules and it’s expected to decide this summer on the amount of countermeasures the US can impose.

"The final list will take into account the report of the WTO Arbitrator on the appropriate level of countermeasures to be authorized by the WTO," USTR said on Monday.

'Lose-Lose'

Airbus shares fell as much as 1.4% in Paris on Tuesday. The European plane maker, which has repeatedly called for a negotiated settlement, said by email that the USTR proposal will only add to tensions.

"That is not creating a healthy environment for working towards a negotiated solution and risks a wide variety of industries on both sides of the Atlantic to arrive in a lose-lose situation," Airbus said.

While senior EU officials expect the US to move forward with retaliation once the WTO authorises it, the imposition of the proposed tariffs would threaten to further strain ties as the US and EU try to sit down to negotiate a trade deal.

US industry groups were quick to oppose the tariffs. "US companies - from farmers, to suppliers to retailers - are already being negatively impacted by the imposition of retaliatory tariffs by key trading partners on certain US distilled spirits resulting from other trade disputes," the Distilled Spirits Council of the United States said in a statement after USTR’s announcement.

The EU has its own pending WTO case against Boeing. The EU in April published its preliminary list of US goods being targeted in a $12bn plan for retaliatory tariffs over subsidies to Boeing, with a focus on farm products from areas that help form Trump’s political base. Other items in the wide-ranging target list included ketchup, nuts, video game consoles and bicycle pedals.

european union  |  airbus  |  boeing  |  us  |  tariffs
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