Paris urges European Union to impose WTO state aid sanctions over Boeing

Clay Curtis
October 18, 2020

The U.S. Trade Representative's office said Brussels has no basis to impose tariffs and said the Trump administration has "exercised restraint" with its WTO judgment.

The EU will seek final approval later this month to slap tariffs on $4 billion worth of USA imports in retaliation for subsidies granted to Boeing, after a World Trade Organization ruling handed down on Tuesday.

The loans stand at the centre of a 16-year-old dispute that has bedevilled trade relations and spread to industries from luxury goods to agriculture as the two sides seek to punish aircraft subsidies with tariffs.

The World Trade Organization decision on Tuesday is part of a trade dispute that has lasted almost 16 years.

-The U.S. has offered to settle a long-running dispute with the EU over aircraft subsidies if plane maker Airbus SE repays European governments billions of dollars received in aid, Reuters reports, citing unnamed sources.

Under the new USA offer, interest rates on past loans to support Airbus development programmes would be reset to a level that assumed that only as few as half of the projects would succeed, two of the sources said, speaking on condition of anonymity.

The EU's top trade official signalled a preference for avoiding new tariffs, calling instead on Washington to withdraw USA levies on European goods after the WTO a year ago authorised a record US$7.5 billion in United States sanctions against European goods. "The EU & the United States should instead build on the good will generated by the tariff reduction agreement concluded in August and speed up work on a negotiated solution", concluded the coalition.

Trump’s warning to the EU about subsidies

"The World Trade Organisation authorises the European Union to overtax United States imports by $4 billion [per year]".

That would assume a higher risk than Airbus partner nations - Britain, France, Germany and Spain - have traditionally priced into the loans and reflects a speculative type of investment.

But one Brussels insider described the USA proposal as "insulting" and said it could accelerate the tariff war. Once again, USA exporting companies find themselves in the crosshairs, as European Union officials prepare for potential retaliatory tariffs targeting transatlantic trade. A USA source, meanwhile, said Lighthizer was "serious" about getting Airbus to repay aid. The EU in response accused the USA of providing subsidies to Boeing and filed complaints with the WTO.

Jamieson Greer, former chief of staff to United States trade chief Robert Lighthizer, said any deal must involve some form of subsidy payback by Airbus.

Airbus says the disputed loan system favours taxpayers because loan repayments on successful planes such as the A320 far outweigh amounts written off on jets that failed to reach sales targets.

"The US is determined to find a resolution to this dispute that addresses the massive subsidies European governments have provided to Airbus and the harm to US aerospace workers and businesses", Lighthizer said.

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