EU Prepares Tariffs Against U.S. Amid WTO Battle
13 April 2019 - 6:49AM
Dow Jones News
By Emre Peker
BRUSSELS -- The European Union is preparing tariffs on $12
billion of U.S. products over subsidies to Boeing Co., raising the
stakes on the Trump administration's plan for punishing the EU's
support to rival plane maker Airbus SE.
Europe's move came after a U.S. said on Monday it intended to
impose tariffs on $11.2 billion of imports from the EU. Brussels's
swift response highlights its resolve to go blow-for-blow with
Washington over the matter.
Both are salvos in the two sides' long-running fight at the
World Trade Organization over government subsidies to the jet
makers, which dominate the large commercial airplane market. Both
the U.S. and EU are starting the process to impose the tariffs, but
essentially are staking out what they believe is the appropriate
penalty for the other's trade transgressions.
But the two sides have said they eventually will abide by
whatever is decided by the world trade watchdog, which already has
ruled some of the subsidies on both sides are illegal and is
determining the damages.
EU officials outlined their plan on Friday, according to people
familiar with the discussions. Europe identified an initial list of
$20 billion worth of U.S. exports, from which the EU will chose
which products to be targeted.
The Airbus-Boeing spat is inching toward a finale after 15 years
of WTO litigation.
Judges at the international trade watchdog are expected to
determine by midsummer how much the U.S. can retaliate against the
EU, based on the harm done to Boeing due to aid given to Airbus.
The EU is poised to get an answer from the WTO on its claims by
early 2020.
Final rulings on awards for both the U.S. and the EU are
expected to be for significantly lower amounts than the damages the
parties have claimed. Washington and Brussels can opt for settling
their differences without resorting to punitive tariffs, as they
have done some cases in the past.
"The EU remains open for discussions with the U.S., provided
these are without preconditions and aim at a fair outcome," said an
official at the European Commission, the EU's executive and trade
authority.
The potential levies upward of $20 billion between the U.S. and
the EU could hit a broad cross-section of industries on both sides
of the Atlantic. They would also come as Washington and Brussels
seek to revamp trade links, following a brief tariff conflict last
year.
Mr. Trump and EU Commission President Jean-Claude Juncker
averted a bruising trade fight with a deal in July, agreeing to
slash tariffs and cut red tape to boost trans-Atlantic trade.
Yet on Tuesday Mr. Trump hailed the proposed tariffs over Airbus
subsidies, after his trade representative said "the time has come
for action," seizing on a longstanding complaint.
"The EU has taken advantage of the U.S. on trade for many
years," Mr. Trump tweeted. "It will soon stop!"
In a sign of the broad impact WTO-driven retaliation can have,
the U.S. said its proposed list of tariff targets contains not only
Airbus aircraft, but also of nonaviation items ranging from cheese
to bicycles. The preliminary U.S. list of EU exports is worth about
$23.8 billion, almost half of which would be selected and targeted
if the WTO grants Washington's bid for damages in full.
The EU is similarly hunting for American exports that will
reverberate beyond Boeing, preferably squeezing supporters of Mr.
Trump and his Republican allies in the agricultural industries, a
sector already hit by the U.S.-China trade fight.
"We'll try to pick products which will hurt the U.S. worse," an
EU diplomat said. "You want to pressure those segments that are
Trump's voters, so he feels the pressure as well when he pressures
us."
The U.S. and the EU, however, have been careful to separate
their WTO fight over plane makers from other bilateral trade
issues. On Tuesday, U.S. said the two sides always try to
compartmentalize issues and cooperate wherever they can. EU
governments, meanwhile, greenlighted a mandate for talks with the
U.S. to slash tariffs on industrial goods.
"These are two different things," another EU diplomat said.
Robert Wall contributed to this article.
(END) Dow Jones Newswires
April 12, 2019 16:34 ET (20:34 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.