US proposes new tariffs on EU products over Airbus subsidies

The US on Monday threatened to impose tariff counter-measures of up to $11.2 billion on a host of European products in response to subsidies received by aircraft maker Airbus.

For more than 14 years, Washington and Brussels have accused each other of unfairly subsidizing Boeing and Airbus, respectively, in a tit-for-tat dispute.

In this file photo taken on February 8, 2019 an Airbus A350-1000 conducts a test flight over Chateauroux airport, central France. [File Photo: AFP]

In a statement Monday, the office of the US Trade Representative (USTR) said the World Trade Organization (WTO) had repeatedly found that European subsidies to Airbus have caused adverse effects to the United States.

"This case has been in litigation for 14 years, and the time has come for action," said US Trade Representative Robert Lighthizer.

"Our ultimate goal is to reach an agreement with the EU to end all WTO-inconsistent subsidies to large civil aircraft. When the EU ends these harmful subsidies, the additional US duties imposed in response can be lifted."

The statement added that the final amount it would seek in duties was subject to arbitration at the WTO, the result of which was expected in the summer.

The USTR issued a 14-page document with a preliminary list of products being considered for additional tariffs, including helicopters, civilian planes and aircraft parts.

It also included food products such as swordfish, salmon, cheeses, fruits, olive oil and wines.

Complicated trade spat

The Boeing-Airbus spat is the longest and most complicated dispute dealt with by the WTO, which aims to create a level playing field in global trade.

Both aviation giants have scored points along the way.

The WTO ruled in March 2012 that billions of dollars of subsidies to Boeing were illegal and notified the United States to end them.

But a few months later, the European Union filed a new complaint, alleging Washington was not complying with that order.

In a ruling published in June 2017, the WTO said the US had brought 28 of 29 programs into compliance, but agreed with Brussels that Washington had not taken "appropriate steps to remove the adverse effects or... withdraw the subsidy" in the case of Washington state.

The EU and the US appealed against that to the WTO Appellate Body, which last month echoed the 2017 finding, although it appeared to take a harsher line against the American side.

Brussels was also reprimanded by the WTO during the Airbus-Boeing row, and the US asked the WTO to determine the amount it could impose in sanctions against the European Union for failing to remove subsidies.

The USTR said Monday that once that report is issued, it will announce a full product list, which comes after months of trade tensions between the US and the EU.

President Donald Trump's administration has made punitive tariffs something of a signature, imposing many and frequently threatening them as a negotiation tactic. The EU has not been an exception.

The EU and the US have been working to set in motion a limited trade pact as part of a truce agreed in July when Trump and European Commission President Jean-Claude Juncker pledged no new tariffs following those imposed on steel and aluminum.

The USTR's statement also comes as Boeing faces a crisis over its 737 MAX aircraft, which is grounded over safety fears following two fatal accidents.

The US plane maker said in a statement that it supports Washington's "ongoing efforts to level the playing field in the global aircraft marketplace."

"Boeing has consistently supported US compliance with WTO rulings. It's now time for the EU to follow that example and end all illegal government support for Airbus."