Paris urges European Union to impose WTO state aid sanctions over Boeing

Remigio Civitarese
Ottobre 18, 2020

Lighthizer said the ruling clearing the way for US$4 billion in European Union tariffs on American goods had "no valid basis" because it was based on a tax provision by Washington state, where Boeing is based, that had been repealed earlier this year.

The EU's top trade official signalled a preference for avoiding new tariffs, calling instead on Washington to withdraw USA levies on European goods after the WTO a year ago authorised a record US$7.5 billion in United States sanctions against European goods.

French Finance Minister Bruno Le Maire on Friday said he's in favor of moving forward with retaliating against the order to encourage a resolution to the dispute. The imposition of $7.5 billion of US tariffs over Airbus subsidies has already started to hit European goods.

- The skies have always been unfriendly between the USA and the European Union, with claims and counterclaims of unfair subsidies given to Airbus and Boeing, the world's two biggest airplane makers setting off a dispute that's lasted 16 years.

The loans stand at the centre of a dispute that has dragged on for 16 years and hit trade relations in sectors ranging from luxury goods to agriculture as the two sides seek to punish each other's aircraft subsidies with tariffs. Later, he will also clarify what US-made products are to be affected by tariffs.

"Europe must prepare to impose sanctions on the United States as it has the right and because she has the strength", Le Maire insisted, noting Trump has indicated Washington would strike back if the European Union applied tariffs to USA goods, continuing the tit-for-tat exchanges. The USTR's office and the European Commission, the EU's executive body, did not respond immediately to requests for comment.

Trump’s warning to the EU about subsidies
Pay up EU! Trump offers trade war truce if European Airbus repays billions in state aid

The offer is not likely to fly with the E.U. One European source called the USA proposal "insulting".

Lighthizer previously said he's seeking two things: a pledge from Europe to end its aircraft subsidies and for Airbus to repay the subsidies it received from France, Germany, Spain and the United Kingdom.

The United States argues that merely addressing future types of support would fail to resolve ongoing harm to Boeing caused by the presence on the Airbus balance sheet of past loans that it can still use to develop jets and offer unfairly low prices.

Jamieson Greer, former chief of staff to United States trade chief Robert Lighthizer, said any deal must involve some form of subsidy payback by Airbus.

Although the United States would not benefit directly from increased repayments by Airbus to European states, U.S. sources say that Boeing would benefit indirectly if Airbus finances were purely market-based.

Airbus said the disputed system favoured taxpayers because loan repayments on successful jets such as the A320 far outweighed amounts written off on jets that failed to reach sales targets.

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