On October 13, 2020 the World Trade Organization (WTO) reached a final decision, through arbitration, authorizing the European Union (EU) to take countermeasures against the United States for the trade impact of tax breaks provided to Boeing at a valuation of $3,993,212,564 USD annually.
15 YEAR BATTLE
The fight between the two aerospace industries isn’t new – it began over 15 years ago when the United States filed a case against the European Union claiming Airbus had received $22 billion in illegal subsidies (an estimated economic benefit of more than $200 billion)… READ ARTICLE
While the level of countermeasure tariffs has not been announced, the list of impacted U.S. products is long targeting a wide array of industries such as seafood, cheese, liquor & wine, tobacco, nuts, civil aircraft, helicopters, chemicals, cotton and more.
WTO Arbitration resolutions are final and not subject to appeal. Losing parties are not allowed to directly retaliate against WTO-authorized countermeasures.
“This long-awaited decision allows the European Union to impose tariffs on American products entering Europe. I would much prefer not to do so – additional duties are not in the economic interest of either side, particularly as we strive to recover from the Covid-19 recession. I have been engaging with my American counterpart, Ambassador Lighthizer, and it is my hope that the U.S. will now drop the tariffs imposed on EU exports last year.”
U.S. RESPONSE
The United States Trade Representative responded quickly, posting a counterargument that claims the EU has no legal basis to impose any additional aircraft tariffs.
The response specifically cited the WTO arbitrator’s decision to explicitly not take into consideration Washington State’s repeal of that tax provision on April 1, 2020, limiting the arbiter’s review to the impact during the 2012-15 period only, to which it assigned a value of approximately $4 billion per year.
“Because Washington State repealed that tax break earlier this year, the EU has no valid basis to retaliate against any U.S. products. 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.”
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