Daily Management Review

China Clause Should Be Included In US-EU Deal On Aircraft Subsidies, Says USTR: Reuters


China Clause Should Be Included In US-EU Deal On Aircraft Subsidies, Says USTR: Reuters
There needs to be agreement on cooperation between the United States and Europe for opposing any future “hurtful” subsidies used as a trade strategy by China for build up its commercial aircraft industry, said US Trade Representative Robert Lighthizer in an interview to the Reuters.
Efforts were ongoing to come to a settlement on the 16-year-old trade dispute between the US and the European Union over the government subsidies to aircraft manufacturers by past governments, Lighthizer said, but also expressed frustration that future subsidies by the European Union or China could not be prevented by the current rules of the World Trade Organization.
“If this plays out, they can start a new subsidy tomorrow, and drag out that litigation for five or six years, and there’s nothing under the WTO that you can do about it at all,” Lighthizer said in a rare interview late on Tuesday.
A number of proposals to settle the matter prior to the exit of the Trump administration from the White House on January 20 have been made, he said.
“In every proposal I’ve made, I’ve said we have to have a clause that says, that whatever we agree to, if China starts to do massive subsidies in this area and it’s hurtful, we have to be able to work together to solve that problem,” he said.
These comments were in line with the opinions of many trade experts of a possible end to the 16-year trade dispute which will be in the form of a transatlantic deal which would be provide a way for the two sides to try and curb government subsidies for its fast-growing aerospace industry by the Chinese government.
Ruling against all past usage of government loans and subsidies to develop new airplanes was passed by WTO but had said had not ruled against such subsidies in the future for the industry.
There have been extensive talks between the US and European negotiators in order to bring an end to the dispute over government help to Europe’s Airbus, which was backed politically and economically by Britain, France, Germany and Spain, and US help and subsidy to its plane maker Boeing.
A call to undertake quick action to resolve the dispute was given by Germany’s ambassador to the United States, Emily Haber, on Wednesday as she described the dispute as a distraction from bigger issues that demand the US and the European Union to draw up joint action such as in the case of climate change and the pandemic.
Considering the harmful impact of the novel coronavirus pandemic on aircraft makers in both the regions, as well as the measures being taken by China to develop rival models, there is urgent need for finding a solution, she said.
While stating that both the sides was not close to an agreement, European diplomats said that they expected they will be able to arrive at an agreement with Lighthizer or possibly his successor.
According to reports quoting sources familiar with the matter, the insistence of the US on repayment of damages has been rejected by EU negotiators. A bilateral dispute settlement mechanism is also being sought by Washington which reflected concerns of the US about the WTO, and want the mechanism to be based on the system adopted in its US-Mexico-Canada trade agreement, said the reports.