WTO allows US to target EU goods in retaliation over Airbus subsidies

The World Trade Organization (WTO) on Monday formally authorized the United States to impose tariffs on up to $7.5 billion of imports of European Union goods after an arbitrator’s decision over subsidies to plane maker Airbus.

Washington is now free to take countermeasures against the EU and Airbus-producing countries Britain, France, Germany, and Spain.

The authorization was a formality after a WTO arbitrator awarded a record right to retaliate over illegal subsidies this month.

US trade ambassador Dennis Shea told the meeting that Washington still preferred a negotiated solution. “That can only happen if the EU genuinely terminates the benefits to Airbus from current subsidies and ensures that subsidies to Airbus cannot be revived under another name or another mechanism,” he said.

The EU delegation told the meeting that it had “serious concerns” and that Washington’s tariff measures were short-sighted.

The two major aircraft makers, Boeing and Airbus, have been involved in a long-running trade dispute. It started in 2004 when Washington accused the UK, France, Germany, and Spain of providing illegal subsidies and grants to Airbus.

A year later, in similar complaints, the EU said that Boeing had received $19.1 billion in prohibited subsidies from the US government between 1989 and 2006.The WTO has found that both Airbus and Boeing received billions of dollars in illegal subsidies in cases that have dragged on for 15 years.

US President Donald Trump threatened to slap $11 billion worth of goods from the EU with import tariffs after the World Trade Organization (WTO) found that EU subsidies to Airbus cause “adverse effects” to the US. Ten percent tariffs will be imposed on Airbus planes and 25 percent duties on a range of products, including French wine, Scottish whiskies, and cheese from across the continent.

On Friday, EU trade chief Cecilia Malmstrom wrote to US Trade Representative Robert Lighthizer urging him to start negotiations to find a settlement in the Airbus and Boeing disputes. She said resorting to tariffs was not a solution.

“It would only inflict damage on businesses and put at risk jobs on both sides of the Atlantic, harm global trade and the broader aviation industry at a sensitive time,” Malmstrom wrote in a letter seen by Reuters.

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