EU may back down over retaliatory tariffs against US for Boeing aid amid pandemic
SPECULATION mounts over whether the European Union will have the political will to trigger planned tariffs against the US over its illegal aid to Boeing
28 April 2020 - 19:00
This comes as the 27-nation bloc is waiting for the World Trade Organization to set the ceiling on damages in a decision due in June.
In more normal circumstances, the political advantages of EU retaliatory duties would outweigh the economic costs. That's because punitive import levies approved by the WTO would let Europe use its well-honed ability to target American goods made in US states that can swing elections and, in the process, defend global trade rules, reported Bloomberg.
In the long-running transatlantic feud over government aid to plane manufacturers, another compelling political reason exists for the EU to pursue trade sanctions: The US in October imposed duties on US$7.5 billion of European goods in retaliation over unlawful subsidies to Airbus.
Not only did President Donald Trump's administration ignore EU pleas to refrain from such action and focus instead on settling the matter at the negotiating table, it decided in February to raise the punitive tariff on Airbus aircraft to 15 per cent from 10 per cent. The increase took effect in mid-March.
Enter the Coronavirus pandemic. As the US and Europe unleash unprecedented economic stimulus, Boeing has sought a bailout and Airbus has urged authorities to support airlines and suppliers.
In that context, Europe might well reconsider the merits of imposing duties on billions of euros of American goods in the aircraft-subsidies feud simply because of the economic self-harm such a move would cause.
One possibility: A European plan to forgo retaliation over unlawful subsidies to Boeing could be accompanied by a high-level plea from Brussels to Trump to scale back tariffs linked to Airbus. In the wake of Washington's recent decision to let US importers defer paying regular customs duties for three months as a result of the pandemic, a European request of that kind would look less fanciful.
EU trade chief Phil Hogan expressed 'hope' that both sides could reach a deal on aircraft subsidies before the WTO renders a verdict on damages in the Boeing case.
More generally, Mr Hogan said the EU and US 'should be working together in order to reduce tariffs, eliminate tariffs where possible' and to 'reignite the global economy post the pandemic'.
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