The United States has been authorized by the World Trade Organization to impose tariffs on up to US$7.5 billion of imports of EU goods after an arbitrator’s decision over subsidies to planemaker Airbus.
164 members make up the WTO’s dispute settlement body cleared Washington to take countermeasures against the European Union and Airbus-producing countries Britain, France, Germany and Spain.
The meeting lasted less than 20 minutes as a WTO arbitrator awarded record right to retaliate over illegal subsidies this month. The chances of it being denied though was also a possibility in the event all WTO members present voted against it.
US trade ambassador Dennis Shea told the meeting that Washington still preferred a negotiated solution. Shea emphasized that that can only happen if the EU genuinely terminates the benefits to Airbus from current subsidies and ensures that subsidies to Airbus cannot be revived under another name or another mechanism.
Meanwhile the EU delegation had serious concerns expressing that US tariff measures were short-sighted.
Ir was revealed that the WTO found that both Airbus and its US rival Boeing received billions of dollars of illegal subsidies in a pair of cases that have run for 15 years. An adjudication in the Boeing case is expected early in 2020.
It was in July 2004 when former Boeing CEO Harry Stonecipher accused Airbus of abusing a 1992 bilateral EU-US agreement providing for disciplines for large civil aircraft support from governments.
Meanwhile, Airbus claims that the military contracts awarded to Boeing, the second largest U.S. defence contractor, are in effect a form of subsidy, such as the controversy surrounding the Boeing KC-767 military contracting arrangements.
However it was in August 2010 and in May 2011 when WTO ruled that Airbus received improper government subsidies through loans with below market rates from several European countries. In a separate ruling in February 2011, WTO found that Boeing had received local and federal aid in violation of WTO rules.
10% tariffs will be imposed on Airbus planes and 25 % duties on a range of products, including French wine, Scottish whiskies and cheese from across the continent.
The EU’s top trade official said Europe would fight until the last moment to convince the US to stop imposing tariffs in retaliation for illegal EU subsidies to Airbus.