US Set to Hit EU With Tariffs Over Airbus Dispute

By Emre Peker

BRUSSELS--The U.S. will soon hit the European Union with fresh tariffs for its subsidies to Airbus SE (AIR.FR), the EU's trade chief said Monday, citing the Trump administration's refusal to settle a long-running commercial fight over aircraft manufacturers.

Washington is poised to move ahead with tariffs after the World Trade Organization determines the final sum the U.S. is entitled to as soon as Sept. 30, EU Trade Commissioner Cecilia Malmstrom said. The U.S. expects to hit $11 billion of annual EU exports.

The EU-proposed a settlement to the U.S. in July, offering to also cover its WTO case against Boeing Co. (BA), but the U.S. has not engaged, she said. Brussels is prepared to hit back with duties on $12 billion of U.S. exports once the WTO issues its decision, expected early 2020.

While the final awards in the 15-year-old Airbus and Boeing cases are likely to be lower than U.S. and EU claims, they will still hit billions of dollars' worth of trans-Atlantic trade. A new round of levies could threaten EU-U.S. efforts to improve trade relations, after President Trump's steel and aluminum duties last year triggered European retaliation.

"We have enough tariffs in the world as it is," Ms. Malmstrom said. "So imposing tariffs on each other... would not be a good solution."

Still, the U.S. appears unwilling to negotiate until after imposing duties on European exports, she said. Because the EU's WTO complaint against Boeing came almost nine months after the U.S. case versus Airbus, Washington will be able to punish Europe first.

The U.S. mission to the EU didn't immediately respond to a request for comment.

European negotiators presented their American counterparts with a comprehensive proposal to regulate subsidies for the civil-aircraft industry, which EU officials said could also serve as the blueprint of a global framework. That would not only settle the Boeing-Airbus feud, but also help the EU and U.S. jet-makers compete more effectively with Russian and Chinese manufacturers challenging their primacy, according to EU officials.

The EU suggested a plan that covers subsidies related to research-and-development support, financing of large civil aircraft, repayable launch investments that would qualify as loans, and tax subsidies. EU officials said the proposal would cover all the subsidies challenges and WTO rulings in the Airbus and Boeing cases.

"We could still discipline ourselves even more, and that is what we propose," Ms. Malmstrom said. "It would be a win-win if we did that because otherwise we escalate tariffs."

Write to Emre Peker at [e-mail]

(END) Dow Jones Newswires

September 16, 2019 10:23 ET (14:23 GMT)

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