US offers tariff truce if Airbus repays billions in aid

Elias Hubbard
October 18, 2020

The World Trade Organization ruled on Tuesday that the European Union has the right to impose tariffs on $ 4 billion in United States goods.

A year earlier, it authorised a record $7.5 billion in U.S. sanctions on European Union goods for the latter's support of Airbus.

"We clearly prefer a negotiated solution", said the Vice President of the EU Commission responsible for trade policy, Valdis Dombrovskis. The European Union has long demanded government subsidies for the USA aircraft manufacturer Boeing It was unfair.

The World Trade Organisation (WTO) ruled on Tuesday that the European Union (EU) could impose tariffs worth US$4 billion (RM16.6 billion) on USA imports in retaliation for illegal American aid to planemaker Boeing Co, a year after the EU was sanctioned for its support of Airbus SE.

The decision by the World Trade Organization is part of a 16-year-old dispute over subsidies Boeing.

The Tuesday decision marks the consummation of a 16-year-long legal battle before the WTO. "The EU & the USA should instead build on the good will generated by the tariff reduction agreement concluded in August and speed up work on a negotiated solution", concluded the coalition. In his statement, Ambassador Lighthizer indicated that the United States also wished to negotiate a settlement to a WTO dispute that began in 2004, noting that he was "waiting for a response from the European Union to a recent USA proposal and will intensify our ongoing negotiations with the European Union to restore fair competition and a level playing field to this sector".

But one Brussels insider described the U.S. proposal as "insulting" and said it could accelerate the tariff war.

Lighthizer previously said he's seeking two things: a pledge from Europe to end its aircraft subsidies and for Airbus to repay the subsidies it received from France, Germany, Spain and the United Kingdom.

Both sides have called for talks while accusing the other of refusing to engage seriously.

The United States argues that merely addressing future types of support would fail to resolve ongoing harm to Boeing caused by the presence on the Airbus balance sheet of past loans that it can still use to develop jets and offer unfairly low prices. The Office of the US Trade Representative chose to maintain a 25 per cent tariff on non-aircraft products.

Currently Airbus repays government loans only when its sales exceed a certain threshold, while loans for weak-selling planes such as the A380 superjumbo can be waived partly or fully.

Although the United States would not benefit directly from increased repayments by Airbus to European states, USA sources say that Boeing would benefit indirectly if Airbus finances were purely market-based.

Airbus says the disputed loan system favours taxpayers because loan repayments on successful planes such as the A320 far outweigh amounts written off on jets that failed to reach sales targets.

Other reports by Click Lancashire

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