US weighing new tariffs on EU goods in aircraft subsidy dispute

The move comes as the date for a decision on reciprocal EU duties slipped to the autumn due to the COVID-19 crisis

The US Trade Representative’s office added items valued at $3.1bn to its list of European goods eligible to be hit with duties - including black olives, beer and gin - and said it could switch gears to target other items on a previously published list or raise existing duty levels further. The move is part of the latest development in the 16-year dispute over aircraft subsidies between Europe’s Airbus and US rival Boeing.

It comes as the aerospace industry has been severely weakened by the coronavirus crisis and amid steps by some governments to support aviation via airlines or suppliers, as well as furlough schemes.

Britain - one of four Airbus core nations and still part of the case despite leaving the EU - on Wednesday urged Washington not to add more tariffs, warning that tit-for-tat measures hurt businesses on both sides of the Atlantic.

The US move is part of a “carousel” approach aimed at maintaining pressure on the EU to reach a settlement and end a dispute that dates back to 2004, dragging through three US presidents and five presidential terms of office. Both sides have won partial victories at the World Trade Organisation, and have signaled interest in settling the matter, but are waiting to see final rulings from the WTO, according to sources familiar with the process.

 Last year, the WTO allowed the United States to levy tariffs on $7.5bn worth of EU goods, including aircraft, wines and cheese, due to Airbus subsidies that it had deemed illegal. Now it is considering the level of tariffs that the EU could impose in a parallel case involving illegal support for Boeing. That decision, initially expected in May or June, has been pushed back to at least September due to the coronavirus health crisis, two people familiar with the case told Reuters. A third source said the decision was not expected until October, weeks before the 3 November US presidential election.

The timing raises the possibility that the EU would be allowed to impose its own tariffs on US goods weeks before the US presidential election, though foreign states tend to avoid taking high-profile actions during such campaigns.

The WTO declined to comment.

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