EU to win right to tariffs on US$4b in US goods in WTO Boeing case

[BRUSSELS] The European Union (EU) is set to win the right to impose tariffs on about US$4 billion in US goods in retaliation for subsidies granted to planemaker Boeing under a World Trade Organization (WTO) ruling due on Tuesday.

The decision threatens to stoke transatlantic trade tensions with just three weeks until the US presidential election on Nov 3, although it could also help at last to settle a 16-year legal battle.

Both the United States and the EU have signalled interest in settling the dispute over subsidies each provided to their respective planemakers, Boeing and Airbus, while accusing the other of refusing to talk seriously.

Tuesday's decision, delayed by the Covid-19 pandemic, follows a WTO ruling last year allowing Washington to impose tariffs on US$7.5 billion in EU goods over state support for Airbus, which has sites in Britain, France, Germany and Spain.

Combined, the two cases represent the world's largest ever corporate trade dispute.

The state of Washington has since moved to repeal tax breaks that benefited Boeing, while Airbus has announced it will increase loan repayments for the A350 plane to France and Spain in bids to settle the matter.

The European Commission has said it would prefer a negotiated solution, but would impose tariffs without one.

It has already drawn up an extensive list of US products it could target including wine, spirits, suitcases, tractors, frozen fish and a range of agricultural produce from dried onions to cherries.

European sources have said the EU could also add tariffs on a further US$4 billion of US products left over from an earlier WTO case, giving it firepower similar to that Washington won in last year's WTO ruling.

The United States says the previous award, allowing the EU to retaliate against special tax treatment for US exporters, but which the EU never implemented, is no longer valid because a law creating the disputed system was repealed in 2006.

Airbus also argues that funding for its A380 plane is no longer relevant after it decided to halt production of the world's largest jetliner due to weak sales.

REUTERS