EU Stands as One While Warning US of Retaliation for New Tariffs Over Airbus-Boeing Spat
REUTERS / MAXIM SHEMETOVBusiness22:31 04.10.2019Get short URL6163Subscribe
The US Trade Representative’s office announced that it will impose new tariffs of $7.5 billion on European goods after the World Trade Organisation found that the EU had provided billions of dollars’ worth of illegal subsidies to Airbus. While Washington’s move is authorised by the WTO, the EU still lacks its permission.
The European Union and its nations’ top officials have warned the US of retaliation if Washington proceeds with slapping tariffs on $7.5 billion worth EU goods, from aircraft to agricultural goods, wines and cheeses, after the WTO ruled on behalf of the US in the trade dispute between the two major aircraft makers, Boeing and Airbus.
German Foreign Minister Heiko Maas, cited by the German media holding Funke, threated that the EU “will have to react and, after obtaining the approval of the WTO, probably impose punitive tariffs as well.” However, German Chancellor Angela Merkel admitted that “we have lost a matter under WTO law,” while the country’s Finance Minister Olaf Scholz called on Europe to react prudently, as Deutsche Welle reports. The German minister pointed out that trade conflicts were in nobody’s interest.
His French counterpart Bruno Le Maire sounded more resolute, threatening to impose sanctions against the US if the latter wouldn’t make any attempt to resolve the Airbus dispute.
“If the American administration rejects the hand that has been held out by France and the European Union, we are preparing ourselves to react with sanctions,” he said.
EU Commissioner for Trade Cecilia Malmstrom echoed his warning, saying that “if the US decides to impose WTO authorised countermeasures, it will be pushing the EU into a situation where we will have no other option than to do the same.”
She noted that despite the authorisation from the WTO Dispute Settlement Body, Washington’s imposing tariffs would be “short-sighted and counterproductive.”
EU officials argue that Boeing has benefited from similar subsidies. But the parallel case by the EU, alleging illegal US subsidies for the aerospace company, is expected to conclude next spring.
On Wednesday, the World Trade Organisation ruled that the EU had provided billions of dollars’ worth of illegal subsidies to Airbus, hurting US rival Boeing and concluded that the United States can impose tariffs on $7.5 billion worth of goods from the European Union as retaliation, putting an end to the trade dispute which began in 2004. As US Trade Representative Robert Lighthizer stated, Washington will begin imposing WTO-approved tariffs on European-made Airbus planes, French wine, Scotch and Irish whiskies, and cheese from across the continent on October 18.
The EU countercharged the US in 2005, observing that Boeing had received $19.1 billion in prohibited subsidies from the US government between 1989-2006, however its complaint is still being investigated by the WTO. With a ruling expected in about eight months, multi-billion punitive measures against the US could potentially be authorised. Brussels is planning to impose tariffs on $20 billion worth of American products.