WTO Rules EU Can Impose Tariffs On $4B Of US Goods

The World Trade Organization (WTO) today officially authorized the European Union to impose $4 billion a year in customs duties on imports from the United States in retaliation for Washington’s subsidies to US aircraft manufacturer Boeing. However, according to Bloomberg, these duties are not expected to be introduced before the presidential election. The US has previously imposed tariffs on European goods due to subsidies by European aircraft manufacturer Airbus.

The imposition of tariffs by the European Union was approved by the WTO arbitration body two weeks ago. At today’s meeting, the tariffs were finally approved by the Dispute Settlement Body. The US delegate to the WTO today called on the EU not to introduce tariffs, as Washington’s state has already stopped illegal support for Boeing. He also warned that the imposition of tariffs would force a reaction from the United States. According to the delegate, the administration of President Donald Trump prefers to resolve the dispute over subsidizing aircraft production through an agreement.

“The European Commission is preparing retaliatory measures (WTO-approved) in close cooperation with member states,” said European Commission Vice-President Valdis Dombrovskis, who was officially appointed EU trade commissioner this month. He added that he was still negotiating with Washington on how to resolve disputes over aircraft subsidies. “In the absence of an agreement, the EU will be ready to take action in line with the WTO ruling,” he said.

The European Union has previously drawn up a list of American products targeted by new tariffs. It includes, for example, airplanes, wines, spirits, frozen fish, tractors, and other products.

Disputes between the US and the EU over subsidies to aircraft production have been going on for 16 years. Last October, the WTO allowed the United States to impose tariffs on goods from the European Union of up to $ 7.5 billion a year in retaliation for subsidizing European Airbus aircraft. Washington then introduced a 10 percent duty on European aircraft and a 25 percent duty on other goods, such as French wines, Scotch and Irish whiskey, or cheese. This year, the United States has increased tariffs on aircraft to 15 percent.

Dombrovskis this month called on Americans to remove tariffs. “If the US does not eliminate its tariffs, we will have no choice but to introduce our tariffs,” he told the Financial Times.

The United States and the European Union have accused each other of illegally supporting their aircraft manufacturers, Airbus and Boeing, since 2004. In resolving these disputes, the WTO has found that both parties provide financial support to their aircraft manufacturers in violation of the organization’s rules to provide them with a more advantageous position on the market.