Hard on the heels of the USA proposing to levy tariffs worth $11 billion on EU goods as a consequence of unfair state subsidies to Airbus Industries, the EU is proposing levying $20 billion in respect of similar subsidies that the US is deemed to have paid to its aerospace giant Boeing. The planned tariffs would be applied to US exports of a range of products to the EU encompassing, aircraft and chemical products, food, frozen fish citrus fruits and tomato ketchup.
Speaking of the latest WTO ruling, the EU’s Trade Commissioner, Cecelia Malmstrom said: "The recent WTO ruling on US subsidies for Boeing is important in this respect. We must continue to defend a level-playing field for our industry."
Ironically, the two side have just agreed plans for trade talks which would be aimed at reducing barriers to trade between them. Both the US and EU proposals to levy tariffs are in accordance with WTO rules and follow rulings made (respectively) in their favour in disputes brought before WTO. The sanctions on both sides will wait for WTO clarification of the justifiable level of retaliatory tariffs that can be applied in respect of the subsidies that each has unfairly given to the aerospace companies.
The EU/USA dispute differs from the trade dispute between China and the USA as the proposed sanctions are within WTO rules and follow the outcome of a process. The tit-for-tat trade war between the world’s largest and second largest economies is outside the WTO process leading to fears that it could undermine rules-based global trade. The US/EU aerospace subsidies row has rumbled on for nearly 15 years in contrast to the Sino-US dispute which (essentially) the US President triggered almost a year ago.
For her part, Ms Malmstrom reiterated the EU’s preference for a settlement which avoided the levying of tariffs: "The EU remains open for discussions with the US, provided these are without preconditions and aim at a fair outcome,"