US trade officials are considering increasing tariffs on European Union imports in response to a World Trade Organization (WTO) report related to a longstanding subsidy dispute involving Airbus.
US trade officials are considering increasing tariffs on European Union imports in response to a World Trade Organization (WTO) report related to a longstanding subsidy dispute involving Airbus.
That report, released 2 December, concludes that changes made to A350 and A380 development loans were insufficient to bring European governments into compliance with WTO recommendations.
“In light of today’s report and the lack of progress in efforts to resolve this dispute, the United States is initiating a process to assess increasing the tariff rates and subjecting additional EU products to the tariffs,” says the Office of the United States Trade Representative.
The agency says that next week it will publish a public notice about its evaluation of a tariff hike.
In October, the USA slapped 10% tariffs on large civil aircraft imported from Europe, and 25% tariffs on other imported products. Most of the tariffs affect items imported from France, Germany, Spain and the UK.
The tariffs responded to a WTO ruling in October that green-lit the US to impose $7.5 billion in annual tariffs on European goods as compensation for alleged subsidies received by Airbus from European governments. The subsidies involved A380 and A350 development loans.
The dispute relates largely to loans Airbus received from European governments to develop the A380, seen here, and A350
Michael Probst, AP/Shutterstock
But as the tariffs took effect, a WTO compliance panel was examining whether the European Union and the countries had already taken steps to comply with WTO recommendations.
Now the compliance panel has issued a report that largely determines that subsidies have not been addressed.
“The panel therefore concluded that the European Union and certain member states failed to implement the recommendations and rulings… to bring its measures into conformity with its obligations,” says the WTO on its website.
The US trade office says: “Today’s findings reaffirmed that the subsidies continue to cause adverse effects, and found further that European governments even extended the subsidies by renegotiating launch aid with Airbus.”
Boeing calls the ruling “a complete loss for Airbus and its government sponsors”.
“It confirms what has long been clear: the EU has failed to comply with WTO rulings despite having years to do so, and billions of euros of illegal government subsidies to Airbus continue to harm the US aerospace industry,” says Boeing. “We hope that Airbus and the EU will now finally turn their energies to resolving this case.”
Airbus, meanwhile, read the WTO’s 2 December report entirely differently, insisting that the findings support a $2 billion annual reduction in tariffs.
The European airframer bases that figure on the WTO panel’s finding that A380 development loans no longer impact Boeing sales. Airbus is ending A380 production in 2021.
“The US Trade Representative now should accept the reality that loans made to Airbus in the early 2000s – for the development of a product that is no longer being sold – do not have an impact on Boeing sales,” says Airbus.
