Trade Cases
Tit-for-Tat Tariffs Over Aircraft Subsidies
Written by Sandy Williams
April 9, 2019
A long-term feud between Boeing in the U.S. and Airbus in Europe is coming to a head. Tuesday the U.S. threatened to impose $11.2 billion of retaliatory tariffs on European goods in response to the continued subsidization of the Airbus manufacturer.
“This case has been in litigation for 14 years, and the time has come for action,” U.S. Trade Representative Robert Lighthizer said in a statement. “The Administration is preparing to respond immediately when the WTO issues its finding on the value of U.S. countermeasures. Our ultimate goal is to reach an agreement with the EU to end all WTO-inconsistent subsidies to large civil aircraft. When the EU ends these harmful subsidies, the additional U.S. duties imposed in response can be lifted.”
A ruling by the Appellate Body of the World Trade Organization on March 28 set the retaliation in motion. As explained by Inside World Trade:
“Thursday’s Appellate Body decision said the U.S. was not yet in full compliance with a 2012 ruling that faulted subsidies provided to Boeing as counter to WTO rules. The EU called the ruling a victory because it knocked subsidy programs in the U.S., while the U.S. claimed a win because the decision showed that the EU’s subsidy programs to Airbus overshadowed the limited support Boeing has received from U.S. entities. A 2018 Appellate Body ruling also found EU subsidies to Airbus ran afoul of WTO rules.”
Both Boeing and Airbus issued statements urging the other to trade fairly and in compliance with WTO rules.
The size of the retaliatory duties is subject to arbitration by the WTO, but the EU Commission says the U.S. estimate is “greatly exaggerated.” The tariffs would be in addition to those imposed on steel and aluminum imports last year. President Donald Trump tweeted on Tuesday:
The full list of goods will be released this summer following the arbitration report form the WTO. Some of the items on the list so far include imports of fish, cheese, citrus fruit, olive oil, wines and liqueurs, textiles, ceramics, and motorcycles.
The European Commission said on Tuesday that the EU plans retaliation over the Boeing subsidies if an agreement cannot be reached with the United States.
“The Commission is starting preparations so that the EU can promptly take action based on the arbitrator’s decision on retaliation rights in this case,” a commission spokesman said. “The European Union remains open for discussions with the United States, provided these are without preconditions and aim at a fair outcome.”
Sandy Williams
Read more from Sandy WilliamsLatest in Trade Cases
CRU: Turkey imposes tariffs on steel imports; Malaysia launches AD probe
Ankara has placed anti-dumping duties of ranging from 6.10% to 43.31% on hot-rolled steel sheet from China, India, Japan, and Russia. Meanwhile, Malaysia has announced it will investigate allegedly dumped steel wire rod from China, Indonesia, and Vietnam.
Price on trade: The excess capacity threat moves closer to home
The Global Forum on Steel Excess Capacity (GFSEC) reaffirmed on Oct. 8 what domestic steel producers have long known—the threat of excess steel capacity never disappeared and is evolving. China’s steelmakers are boosting capacity and exports, echoing the 2016 global steel crisis. There is no doubt that China is successfully weaponizing excess capacity across many industries, and the fatal damage to domestic production and national security undermines the interests of all market-oriented countries. The question now is: How will GFSEC countries respond?
US bans steel made with forced labor from Baowu subsidiary
The US has banned imports from a subsidiary of the world’s largest steelmaker because it is allegedly using forced labor to produce steel products.
China challenges Canada’s tariffs on steel, aluminum, EVs
China is challenging Canada’s decision to put tariffs on imports of Chinese steel, aluminum, and electric vehicles.
Leibowitz: Harris, Trump don’t talk much about steel and trade – because they (mostly) agree
By most accounts, the issues that are most important for voters in this election are the economy, immigration, and abortion. International trade policy plays a key role in at least two of those three (the economy and immigration). Both presidential candidates recognize that trade and tariffs are an important focus. And “America first” is a rallying point for both candidates.