EU wins right to impose tariffs on $4bn of US goods

A World Trade Organization (WTO) ruling on Tuesday gave the European Union the right to impose tariffs on $4 billion of US goods in retaliation for subsidies granted to Boeing.

The award threatens to increase trade tensions just three weeks before US presidential election on November 3.

However, some analysts said it could hasten discussions to resolve the 16-year legal battle over subsidies to aircraft manufacturers Boeing and Airbus.

Tuesday’s decision follows a WTO ruling last year allowing the US to impose tariffs on $7.5 billion of EU goods over state support for Airbus, which has sites in the UK, Germany, France and Spain.

The European Commission said it would not impose duties if the US withdrew its tariffs on European goods such as wine and whisky.

Airbus CEO Guillaume Faury said: “Airbus did not start this WTO dispute, and we do not wish to continue the harm to the customers and suppliers of the aviation industry and to all other sectors impacted.

“As we have already demonstrated, we remain prepared and ready to support a negotiation process that leads to a fair settlement.

“The WTO has now spoken, the EU can implement its countermeasures.

“It is time to find a solution now so that tariffs can be removed on both sides of the Atlantic.”

Airbus added that it fully supports the EU Commission “in taking the necessary action to create a level playing field and seek a long overdue agreement.”

US Trade Representative Robert Lighthizer told The Associated Press that the decision “doesn’t really authorize any action on their part’’ because Washington state has already repealed the tax breaks that the WTO deemed illegal.

“Our view is that we’re in compliance,’’ Lighthizer said.

He also said that negotiations with the EU on a resolution are ongoing.

The WTO said the lifting of the tax breaks was not enough to prevent the ruling.

European Commission executive vice president Valdis Dombrovskis said the ruling will allow the EU to impose tariffs on US goods but he added: “I would much prefer not to do so — additional duties are not in the economic interest of either side, particularly as we strive to recover from the COVID-19 recession …

“It is my hope that the US will now drop the tariffs imposed on EU exports last year.

“This would generate positive momentum both economically and politically, and help us to find common ground in other key areas.”

Boeing said in a statement: “We are disappointed that Airbus and the EU continue to seek to impose tariffs on US companies and their workers based on a tax provision that has been fully and verifiably repealed …

“Rather than escalating this matter with threats to US businesses and their European customers, Airbus and the EU should be focusing their energies on good-faith efforts to resolve this long-running dispute.”