U.S. Threatens Further Tariffs on $4 Billion of EU Goods--Update
03 July 2019 - 12:18AM
Dow Jones News
By Joshua Zumbrun
The U.S. widened its threat to impose tariffs against the
European Union, pending the outcome of a World Trade Organization
case over the EU's subsidies of the airplane manufacturer Airbus
SE.
The Office of the U.S. Trade Representative said Monday that as
part of a long-running dispute over aircraft subsidies it would
consider tariffs on an additional 89 items with an annual trade
value of $4 billion, including cheese, pasta and Scottish and Irish
whiskies as well as chemicals and metals. The U.S. in April began
the process of imposing tariffs against the EU pending the
resolution of a WTO case that found the aircraft manufacturer has
received unfair governmental support. The EU has proposed tariffs
against the U.S. over a companion case regarding U.S. subsidies of
Boeing Co.
The announcement expands the USTR's earlier threat, and now
leaves items with a trade value of about $21 billion a year under
consideration for tariffs, according to the statement. The Trump
administration has largely sought to portray these tariffs as
separate from their other trade efforts, saying that these tariffs
are part of a distinct dispute over aviation subsidies, and not
part of the overall effort to apply pressure to the EU to negotiate
a broad trade deal.
Airbus on Tuesday said "this only adds to the trade tensions but
in reality does not change anything." The level of retaliation is
set by the WTO, the European plane maker said, adding the U.S. move
made negotiating a solution harder and could result in a "lose-lose
situation" for industries on both sides.
Boeing did not immediately respond to a request for comment.
The European Commission's president, Jean-Claude Juncker, and
President Trump agreed to negotiate a trade pact last summer, but
the two sides have made little progress in their negotiations. Even
if the Airbus-Boeing spat is largely separate from other trade
issues, the threat of tariffs hasn't been conducive to progress in
those talks.
The issue between the aircraft companies, however, predates
President Trump by over a decade. The EU and U.S. have been
tangling before the WTO for about 15 years over dueling claims that
manufacturers are unfairly subsidized. The WTO has found that both
sides unfairly subsidize their aircraft and may make a decision
later this year that would allow the U.S. and EU to impose tariffs
as countermeasures to these unfair subsidies. The WTO will also
rule on the extent of harm caused by the subsidies, which would
determine the size of tariffs that would be permissible in
response.
These tariffs differ from most others pursued by the Trump
administration because they would be imposed in response to an
official WTO ruling, rather than unilaterally initiated by
Washington. The tariffs in place against China, for example,
stemmed from a U.S.-initiated investigation into China's
intellectual-property practices, which provided legal justification
for the administration to impose tariffs, so far, against roughly
$250 billion in imports. The U.S. tariffs against global steel and
aluminum imports were initiated by Washington with the official
justification that steel and aluminum imports threatened U.S.
national security.
While some of the administration's tariffs have had few
supporters, the WTO case against Airbus has been supported by
Boeing. When the tariffs were first announced in April, the
aircraft manufacturer said it supported the USTR's efforts to
"level the playing field."
Experts on the WTO's litigation process don't expect the final
scale of tariffs to be as large as that proposed by the U.S. and
EU.
"The EU remains open for discussions with the U.S.," a European
Commission spokesman said Tuesday. The EU's executive arm declined
to comment on procedural steps by the USTR, highlighting that the
final award is still to be decided. Brussels also reiterated that
barring a settlement it is ready to "promptly" retaliate against
the U.S., once the WTO finalizes penalties in the bloc's case
against Boeing. The EU award is expected early 2020.
The USTR said its final list of tariffs "will take into account
the report of the WTO Arbitrator on the appropriate level of
countermeasures to be authorized by the WTO."
Before imposing the tariffs, the USTR will hold a public hearing
Aug. 5, when companies can testify about the effects of the
tariffs.
(END) Dow Jones Newswires
July 02, 2019 10:03 ET (14:03 GMT)
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