WTO approves European tariffs on Boeing jets and other US goods

Daniel Fowler
October 14, 2020

Tuesday's decision follows a WTO ruling past year that prompted the United States to begin imposing tariffs on 7.5 billion dollars in European Union goods and services over state aid for Europe-based aircraft maker Airbus.

The World Trade Organisation (WTO) has today announced its decision on the European side of the long-running subsidies dispute.

Consuming thousands of pages of testimony and an estimated $100m in costs since 2004, the aircraft spat has tested the resolve of the WTO, which is busy selecting a new leader.

The EU had argued that tax breaks for Boeing from Washington state, which was once headquartered in Seattle and has major manufacturing operations in the state, unfairly harmed Airbus jets in the large single-aisle civil aircraft market - namely the A320neo and A320ceo aircraft.

Boeing shares fell by two percent. The EU has leveled similar accusations against the USA, saying Boeing received illegal subsidies.

The move comes nearly exactly a year after a similar approval was made for the USA to tax goods imported from the EU. But the two sides were left sparring over how genuinely they were trying to end decades of aerospace support.

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It's unlikely the European Commission will impose the authorized tariffs before the US presidential election. "This would generate positive momentum both economically and politically, and help us to find common ground in other key areas". Meanwhile, the European Union has already finished its public consultation on planned countermeasures and has published the preliminary list of US products to which they will apply, including Boeing aircraft.

EU flags flutter outside the European Commission headquarters in Brussels, Belgium, August 21, 2020.

While the European Commission has said it would prefer a negotiated solution, the bloc would impose tariffs that could target wine, spirits, suitcases, tractors, frozen fish and agricultural produce without one. "Any imposition of tariffs based on a measure that has been eliminated is plainly contrary to WTO principles and will force a USA response".

Last year, the WTO authorised a record $7.5 billion in U.S. sanctions against European goods and services over the bloc's assistance to Airbus, also considered improper under worldwide trade regulations.

But Boeing's top European customer Ryanair has called on Boeing to pay the tariffs and is expected to use this as leverage in negotiations to buy more of its grounded 737 MAX. That ruling resulted in the Trump administration imposing tariffs on $7.5 billion worth of European goods, including civil aircraft, Parmesan cheese, French wine and Scotch and Irish whiskies.

On Twitter, EU Trade Commissioner Valdis Dombrovskis said the EU would "immediately re-engage with the US" and strongly preferred a "negotiated settlement".

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