Boeing Jets, Other U.S. Goods Worth $4 Billion Face EU Tariffs

Date: Tuesday, November 10, 2020
Source: The Wall Street Journal

BRUSSELS—Raising the stakes in a protracted trade fight, the European Union’s top trade official said the bloc will impose tariffs on $3.99 billion of Boeing Co. jets and other U.S. goods annually, with the aim of negotiating a settlement.

The EU action, sanctioned last month by the World Trade Organization, comes 13 months after the U.S. imposed WTO-permitted tariffs on $7.5 billion in Airbus SE jets and other imported European products, the largest arbitration award in WTO history.

Europe’s retaliation is essentially a tit-for-tat that EU Trade Commissioner Valdis Dombrovskis on Monday said he hopes will bring the dispute to an end.

“I think we have been very clear on all occasions that our preference is for a negotiated settlement,” Mr. Dombrovskis said. “So as soon as the U.S. is willing to drop their tariffs, we are willing to drop our tariff.”

Both sides have said they want to rewrite global rules for subsidizing jetliner development, particularly as China gets more active in the field. But they disagreed on terms for talking while the parallel WTO cases ground forward. Last month’s decision by the trade body ended that litigation process.

The EU had delayed imposing tariffs since the ruling in its favor on Oct. 13, preferring not to proceed before the U.S. election. Some officials had also suggested waiting until the new U.S. administration was in place in January.

EU trade officials instead decided to make the move—which is likely to be seen as hostile in the U.S.—while Donald Trump is still president. They hope pressure from affected industries will prompt progress before Inauguration Day.

The tariffs will come into effect on Tuesday, EU officials said. They include a 15% duty on imports of all Boeing models, accounting for about 44% of the $4 billion in levies, an EU official said. Other goods will be hit with a 25% tariff.

On Monday evening, the EU said the U.S. products to be targeted with the 25% duty would include tobacco, nuts and seeds, spirits, sauces, soups and syrups, self-propelled shovel loaders, tractors and proteins.

Mr. Dombrovskis said that given the U.S. decision last year to quickly impose tariffs and the fact the new administration won’t take office until January, the EU decided it shouldn’t wait longer to impose the tariffs.

The long-running jetliner dispute is one of several trade clashes to strain trans-Atlantic ties under the Trump administration, although the Boeing-Airbus case stretches back nearly two decades.

Mr. Dombrovskis said EU officials had been in contact with the team of President-elect Joe Biden, including about trade issues, but didn’t say whether they had discussed the Boeing tariffs.

The jetliner dispute is the longest since the WTO’s inception. In 2004, the U.S. took European countries to the trade body over subsidies to Airbus, and Europe responded soon after with a case against U.S. support for Boeing.

WTO rulings since then have found that both sides provided prohibited subsidies, with Europe doing so to a greater extent. The WTO’s pronouncement in October ended years of suits and countersuits and left the two sides with the choice of negotiating a solution or fighting a protracted trade battle.

An Airbus spokesman said the company welcomed the EU move. Boeing didn’t immediately respond to a request for comment.

Mr. Dombrovsksis said he is hopeful that a settlement can still be negotiated with the Trump administration’s trade teams. The EU has been in talks with U.S. Trade Representative Robert Lighthizer in recent days.

Mr. Lighthizer said Monday that the U.S. was disappointed by the EU’s action and repeated the U.S. position that the tariffs were inappropriate since subsidies to Boeing were no longer in effect.

“The alleged subsidy to Boeing was repealed seven months ago,” Mr. Lighthizer said. “The EU has long proclaimed its commitment to following WTO rules, but today’s announcement shows they do so only when convenient to them.”

The USTR announced no retaliatory actions, however, and said that the USTR and EU remain in negotiations.

Mr. Dombrovskis struck a cautious note on the prospect of relaunching broad bilateral trade talks with the incoming administration. He said his immediate goal will be to work with the U.S. on WTO reform and to aim for targeted bilateral deals, including resolving trade disputes between the two sides and striking trade facilitation agreements.


[Read from the original source.]