EU Braces for U.S. Tariffs Over Airbus Dispute

By Emre Peker 

BRUSSELS -- The U.S. is poised to impose new tariffs on European Union exports over the bloc's subsidies to Airbus SE, the EU's trade chief said Monday, citing the Trump administration's unwillingness to settle a long-running commercial dispute over aircraft manufacturers.

The EU expects the World Trade Organization will set the final sum the U.S. is entitled to in its successful complaint as soon as Sept. 30, EU Trade Commissioner Cecilia Malmstrom said. Washington has said it expects to be able to impose tariffs on $11 billion in annual EU exports.

The EU has filed its own WTO complaint against Boeing Co., but as the U.S. began its case nine months earlier Washington will be able to punish Europe first.

Ms. Malmstrom said that the EU proposed a settlement to the U.S. in July, offering to also cover its WTO case against Boeing, but that the U.S. hasn't engaged. Brussels is planning to retaliate with duties on $12 billion of U.S. exports once the WTO issues its decision in the Boeing case, expected early 2020.

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

While the final awards in the 15-year-old Airbus and Boeing cases are likely to be lower than the U.S. and EU claims, they will still affect 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."

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 11:50 ET (15:50 GMT)

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