The European Union has won the right to impose tariffs on about $4 billion in Boeing jets and other U.S. goods annually under an almost unprecedented World Trade Organization (WTO) ruling on Tuesday.
It follows last year's WTO ruling that gave Washington a green light to impose tariffs on $7.5 billion in EU goods over state support for Airbus from European countries.
Top US trade negotiator Robert Lighthizer reacted by saying the EU has “no lawful basis to impose tariffs” given that subsidies for Boeing were already repealed.
While the European Commission is not expected to move forward with tariffs immediately, now expressing strong support for a negotiated settlement to the WTO's longest such dispute since the trade body's inception (at 16 years), Lighthizer warned, “Any imposition of tariffs based on a measure that has been eliminated is plainly contrary to WTO principles and will force a U.S. response,” as quoted in The Wall Street Journal.
Airbus said it supports any action the EU takes. Meanwhile Airbuse responded that the company is “ready to support a negotiation process that leads to a fair settlement,” but remains supportive of any EU action on the matter. “It is time to find a solution now so that tariffs can be removed on both sides of the Atlantic,” Airbuse Chief Executive Guillaume Faury said.
Brussels has held out of the possibility that it's ready to move on tariffs without negotiations, hoping to leverage pressure and urgency just three weeks before the US presidential election.
Reuters noted that "It has already drawn up an extensive list of U.S. products it could target including wine, spirits, suitcases, tractors, frozen fish, and a range of agricultural produce from dried onions to cherries."
"We welcome the publication of the @wto decision on the countermeasures the EU can impose in respect of US subsidies to Boeing as a necessary, final step in the Airbus/Boeing litigation."— Scotch Whisky Association (@ScotchWhiskySWA) October 13, 2020
Read our full statement 👉 https://t.co/sedDAybmlR https://t.co/piKbhSBePb
"European sources have said the EU could also add tariffs on a further $4 billion of U.S. products left over from an earlier WTO case, giving it firepower similar to that Washington won in last year’s WTO ruling," Reuters added.
Tuesday's ruling will no doubt inflame White House criticism of the Geneva-based trade body, given it's a massive and almost unprecedented penalty, and given the impossible to ignore geopolitical angle baked into the relationship between the two aviation giants on either side of the Atlantic.