Daily Management Review

WTO Formally Allows US To Tariff EU Good Over The Airbus Subsidy Case


WTO Formally Allows US To Tariff EU Good Over The Airbus Subsidy Case
A formal authorization as given on Monday to the United States by the World Trade Organization (WTO) allowing Washington to impose import tariffs on products imported into the US from the European Union worth up to $7.5 billion. This was granted as a consequence of a ruling by an arbitrator panel of the WTO over the case of government subsidies given to the European plane maker Airbus.
Following this formal approval by the WTO, the US can now freely impose import tariffs on imports into the US of goods from Britain, France, Germany, and Spain which are the countries that are directly linked to production of Airbus aircraft and those that had allegedly provided government subsidies to the plane making company to compete against the United States based rival plane making giant Boeing.
Earlier this month, a WTO arbitrator awarded a record right to retaliate against the government subsidies to Airbus, judged to be illegal under WTO rules, to the US. 
Despite the formal awarding of the right of imposing tariffs on EU goods, the US still wants a negotiated solution for the issue, said US trade ambassador Dennis Shea at the meeting. “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,” he said.
According to the delegation from the EU present at the meeting said that it had “serious concerns” about the ruling and said that the tariff based measures being planned by the US were reflection of short-sighted view that Washington was taking.
The trade and business dispute between the two largest manufacturers of aircraft - Boeing and Airbus, have been ongoing for a long time. It was back in 2004 that the US first accused Airbus being granted government subsidies illegally by the UK, France, Germany, and Spain.
A similar complaint against the US government with respect to Boeing was made by the EU a year after the US complaint in which the block alleged that between 1989 and 2006, Boeing had been granted $19.1 billion in prohibited subsidies by the US government. The arbitrator panel at the WTO has found both sides guilty of providing illegal subsidies to both Boeing and Airbus. The case has been going on at the WTO for 15 years.
After the World Trade Organization (WTO) found that EU subsidies to Airbus cause “adverse effects” to the US, threats of import tariffs on EU goods worth $11 billion was issued by the US President Donald Trump.   
Trump had threatened that his administration plans to impose a 10 per cent import tariff on planes made by Airbus and a 25 per cent import tariff on a range of products imported into the US from the EU which includes French wine, Scottish whiskies, and cheese from all across the EU.
In a letter written to US Trade Representative Robert Lighthizer, the EU trade chief Cecilia Malmstrom urged the US to being negotiations to seek a resolution to settle the dispute between Airbus and Boeing. She said resorting to tariffs was not a solution.