The European Union (EU) has decided to push thru with its plan to impose tariffs on $4 billion worth of US goods as penalty for US subsidies for Boeing.
The EU tariffs, which were authorized by the World Trade Organization (WTO) last month, will be imposed on several US products, including tractors, ketchup and orange juice. They will go into effect on Tuesday.
Boeing issue with the US
In October 2019, the US announced plans to impose tariffs on $7.5 billion worth of exports from Europe after the WTO ruling on the Airbus subsidies issue.
A senior US Trade Representative official announced the plan to place tariffs on the exports from Europe after the WTO ruled that the US could target goods from EU nations because they had failed to comply with an earlier ruling regarding government subsidies for Airbus.
The dispute between the European and US governments over subsidies to Airbus-manufacturer Boeing goes all the way back to 2004 when EU authorities revealed that the company had received $19 billion in unfair subsidies from federal and state governments. The US government followed suit with a similar filing that year.
During that time, EU Trade Commissioner Cecilia Malmström said: “Our readiness to find a fair settlement remains unchanged. But if the US decides to impose … countermeasures, it will be pushing the EU into a situation where we will have no other option than do the same.”
Initially, the WTO said the US was justified in its move to impose the tariffs on items such as certain whiskeys, wines and cheese, for support granted to Airbus but in October of this year, the WTO similarly ruled in favor of the EU over support offered to Boeing.
Resolution under new US leadership
Despite the move, the EU is still hoping to resolve the issue with the US.
EU Trade Commissioner Valdis Dombrovskis said Joe Biden’s election could help “reboot” talks between the two groups and claimed that the EU wanted to see both sides remove their respective tariffs.
Dombrovskis added: “Removing these tariffs is a win-win for both sides, especially with the pandemic wreaking havoc on our economies. We now have an opportunity to reboot our transatlantic co-operation and work together towards our shared goals.”
On the other hand, US Trade Representative Robert Lighthizer, who served under the Trump administration, said the US was “disappointed” by the EU’s decision. He argued: “The alleged subsidy to Boeing was repealed seven months ago.”
“The EU has long proclaimed its commitment to following WTO rules, but today’s announcement shows they do so only when convenient to them,” Lighthizer continued.
While both sides have taken initiatives to correct their respective offenses, Dombrovskis pointed out that they are far from coming up with a settlement.
He said: “We have made clear all along that we want to settle this long-running issue. Regrettably, due to lack of progress with the US, we had no other choice but to impose these countermeasures.”
Under the new scheme, US aircraft imported to Europe will face a 15% tariff while border taxes will be imposed on various items, including tractors, tobacco ketchup, orange juice, cheddar cheese and sweet potatoes.