Airbus, EU warn of dire consequences if US imposes WTO tariffs

AIRBUS has warned that if the US exercises its right under WTO rules to impose US$7

07 October 2019 - 19:00

AIRBUS has warned that if the US exercises its right under WTO rules to impose US$7.5 billion in retaliatory tariffs on EU goods to compensate for losses suffered from illegal state subsidies, it will not only create disruption in the aerospace industry, but in the broader global economy as well.

The World Trade Organisation approved of the imposition of the tariffs on a wide variety of goods imported from the EU, a smaller levy than had been sought by the US, reports American Shipper.

The tariffs, the largest ever imposed by the WTO, are in retaliation for illegal subsidies granted to Airbus, particularly in relation to development costs on A350 and A380 aircraft.

Reacting to the WTO ruling, European Trade Commissioner Cecilia Malmstrom, said the WTO-sanctioned tariffs would be 'short-sighted and counterproductive'.

'Both the EU and the US have been found at fault by the WTO dispute settlement system for continuing to provide certain unlawful subsidies to their aircraft manufacturers,' Ms Malmstrom said.

'The mutual imposition of countermeasures, however, would only inflict damage on businesses and citizens on both sides of the Atlantic, and harm global trade and the broader aviation industry at a sensitive time,' she said.

The WTO ruled in 2010 and 2011 that both aircraft manufacturers had been recipients of illegal government aid; Boeing from government contracts and tax breaks and Airbus for launch aid that has not been repaid.

Tariffs on goods imported from the EU will hit US consumers at the same time that those consumers are being affected by levies placed by the Trump Administration on goods imported from China.

America has consistently has taken a hard line, defending the effectiveness of its tariffs on Chinese products in bringing China to the negotiating table, and also in convincing Japan to open its agricultural market to US products.

The administration is unlikely to heed calls for softening its approach in implementing tariffs. It is uncertain whether tariffs on Airbus aircraft would affect firm orders already placed by US carriers and leasing companies or would be levied only on orders not yet firmed up.


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