Now, EU can impose tariffs on $4bn US goods in Boeing case

Now, EU can impose tariffs on $4bn US goods in Boeing case

Reacting to subsidies for aircraft manufacturer Boeing BA.N, the European Union (EU) on 13 October won the right to impose tariffs on US goods worth $4 billion. The latest World Trade Organization (WTO) directive follows its own 2019 ruling exhorting the US to start imposing tariffs on $7.5 billion worth of EU goods over state aid to Airbus AIR (Britain, Germany, France and Spain).

This tariff award, coming just three weeks ahead of the US presidential elections, might worsen what together constitutes the world's largest ever trade dispute. On the other hand, it might lead to talks to settle the 16-year-old legal battle over subsidies to aircraft manufacturers Airbus AIR and Boeing with both the EU and USA having shown interest in resolving the dispute.

The trade war, underway since 2004, has cost nearly $100 million and the WTO is busy looking for a new leader. The US has since retracted an aerospace tax break which helped Boeing, while Airbus AIR has increased loan repayments for A350 aircraft to Spain and France to resolve the matter.

The US government says that the EU has no legal basis for imposing tariffs as the disputed tax break has been done away with. Boeing too says it has already conformed to WTO findings. US trade representative ROBERT LIGHTHIZER reportedly said that any EU move to impose tariffs on US goods would be contrary to WTO principles and would force a response from the US.

Meanwhile, the EU too maintains that there is no basis for US tariffs against subsidies to the A380 superjumbo as it is being taken out of production. While Airbus says it will stop imposing duties if the US withdraws its current tariffs on European goods like whisky and wine. Both sides can then work towards finding common ground.

US products including produce from dried onions to cherries, frozen fish, tractors, suitcases, spirits, wines and airplanes are on the EU target list. With the EU having won the right to impose tariffs on $4 billion worth of US goods, European airlines that import Boeing jets may have to pay tariffs to match US border taxes on Europe-built Airbus aircraft (15 per cent). However, Boeing's top European customer, Ryan Air (RYA.I) called on Boeing to pay the tariffs and is expected to leverage this to buy more of its grounded 737 MAX. According to European sources, EU is likely to use $4 billion in dormant tariffs awarded in an earlier case in addition to the latest tariff award.