WASHINGTON, D.C.: After getting the green light from the World Trade Organization (WTO), the US moved on Wednesday (Thursday in Manila) to retaliate against the European Union (EU) over illegal subsidies for Airbus, announcing tariffs on $7.5 billion (6.8 billion euros) of European goods starting on October 18.
The ruling is the largest arbitration award in WTO history and a landmark moment in the longstanding Airbus-Boeing battle, which threatens to intensify the already strained trade relations between EU and US.
The top US trade negotiator said he expected to begin talks with Brussels soon to try to resolve the dispute. But US President Trump hailed the decision, calling it a “big win” for the US and claiming credit for the outcome of the 15-year-old case.
“We’re having a lot of wins at the WTO,” Trump said. “All of those countries were ripping off the United States for many years and they know I’m wise to it.”
The EU will face tariffs of 10 percent on aircraft and 25 percent on other goods, like cheeses, whiskey and olive oil, as some industrial products largely from the four countries that support Airbus: France, Germany, Spain and Britain.
“For years, Europe has been providing massive subsidies to Airbus that have seriously injured the US aerospace industry and our workers,” US trade representative Robert Lighthizer said in a statement.
“We expect to enter into negotiations with the European Union aimed at resolving this issue in a way that will benefit American workers,” he said.
Although the WTO ruling allows Washington to penalize the EU with duties up to 100 percent, the US has limited the tariffs for now but “has the authority to increase the tariffs at any time or change the products affected,” the statement from Lighthizer’s office said.
Brussels earlier on Wednesday also indicated a willingness to negotiate.
The EU’s readiness to find a fair settlement remains unchanged, its statement said, adding that the bloc had “shared concrete proposals with the US for a new regime on aircraft subsidies” but had not yet received a response.
But US trade officials argued that they had not heard serious offers from Brussels until recent weeks when it became apparent that WTO decision was imminent.
More friction and retaliation
Though the case has been wending its way through the global trade court for years, the final decision added more fuel to the simmering disputes between the economic powers already at odds over US tariffs on steel and
aluminum and the perilous threat of taxes on European automobiles.
The EU immediately threatened to respond to any US move with tariffs of its own. But a US trade official said it would be illegal under WTO rules and the US would be prepared to respond.
It began in 2004 over what The US called massive corporate welfare for Airbus — a direct competitor to US aerospace firm, Boeing.
It has since been mired in the WTO’s complex dispute settlement system, which allows for a range of appeals.
But Wednesday’s decision, which cannot be appealed, marked the first time The US has been cleared under an international trade law to slap countermeasures on EU products.