WTO: US can slap tariffs on $7.5bn of EU goods

The country is now free to take countermeasures against the EU and Airbus-producing countries

US ambassador to the WTO, Dennis Shea

The World Trade Organisation (WTO) formally ruled on Monday that the United States is free to take countermeasures against the European Union and Airbus-producing countries Britain, France, Germany, and Spain. This way the President Donald Trump administration no longer faces any legal obstacles for its set of previously scheduled sanctions on billions of dollars of European products that could now take effect on Friday.

The ruling was a formality after a three-person WTO tribunal of arbitrators earlier this month issued a ruling that allowed the enactment of an historically high $7.5bn worth of countermeasures against the bloc and its Airbus-producing countries over illegal subsidies.

In the absence of a last-minute negotiated settlement between Washington and Brussels, the tariffs will kick in on a medley of products that range from Scotch whisky, to French wine, Spanish olives and Italian cheese by the end of the week. According to the trade official's account, the US ambassador to the WTO, Dennis Shea said it had always preferred a negotiated settlement but that it hoped the countermeasures that take effect later this week would "encourage the EU to agree to a genuine cessation of its WTO-inconsistent subsidies and the adverse effects that flow from them."

The two major aircraft makers, Boeing and Airbus, have been involved in a long-running trade dispute. It all started in 2004 when Washington accused the UK, France, Germany, and Spain of providing illegal subsidies and grants to Airbus. A year later, in similar complaints, the EU said that Boeing had received $19.1bn in prohibited subsidies from the US government between 1989 and 2006. At the end, the WTO has found that both Airbus and Boeing received billions of dollars in illegal subsidies in cases that have dragged on for 15 years.

After the WTO found that EU subsidies to Airbus cause “adverse effects” to the US, US President Donald Trump threatened to slap $11bn worth of goods from the EU with import tariffs. Under the ruling 10% tariffs will be imposed on Airbus planes and 25% duties on a range of products, including French wine, Scottish whiskies, and cheese from across the continent.

On Friday, EU trade chief Cecilia Malmstrom wrote to US Trade Representative Robert Lighthizer urging him to start negotiations to find a settlement in the Airbus and Boeing disputes. She said resorting to tariffs was not a solution.

“It would only inflict damage on businesses and put at risk jobs on both sides of the Atlantic, harm global trade and the broader aviation industry at a sensitive time,” Malmstrom argued in a letter.

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