By Emre Peker
BRUSSELS -- The European Union signaled it wouldn't immediately
retaliate against new U.S. tariffs, seeking to avoid a broader
trade war as Washington moves to punish the bloc over Airbus SE
subsidies the World Trade Organization ruled illegal.
U.S. Trade Representative Robert Lighthizer on Wednesday said
Washington would impose levies starting Oct. 18 on $7.5 billion of
European goods -- including commercial jetliners, Irish and Scotch
whiskies, cheeses and hand tools -- tapping the WTO's biggest-ever
arbitration award.
"We regret that the U.S. appears to have taken the decision to
impose additional tariffs," Daniel Rosario, a trade spokesman for
the European Commission, said on Thursday. A negotiated solution,
he added, "still is, our preferred approach to this problem."
The U.S. made a strategic decision to swiftly apply tariffs: A
WTO award ruling next year will enable EU countermeasures over
illegal subsidies the WTO found were made to Airbus rival Boeing
Co. After unveiling tariffs that will squeeze Airbus and sensitive
European industries led by agriculture, U.S. officials said they
are ready for talks.
President Trump, who has repeatedly claimed the EU has taken
advantage of the U.S., is also poised to decide by Nov. 13 on
whether to impose duties on imports of European cars and auto
parts.
"A nice victory!" Mr. Trump tweeted on Thursday, hailing the WTO
award in the long-running aircraft fight.
In August, the president once again raised the issue of car
tariffs, saying Europeans "started to get a little bit
worried."
A White House decision to tax auto imports would unleash a
tit-for-tat escalation covering nearly 10% of $1 trillion in annual
U.S.-EU trade in goods and services. The EU is eager to make a deal
in a bid to contain the fallout from the trans-Atlantic aircraft
battle, along with revamping trade relations to avoid a bruising
economic fight.
"I'm not convinced the U.S. is seeking an immediate settlement"
on the WTO case, said Sam Lowe, a trade expert at the Centre for
European Reform, a think tank. "This dispute, despite being legal,
will spill over into the politics of the trade war."
European officials signaled their inclination to temporarily
accept U.S. duties of 10% on commercial jetliners and 25% on
agricultural and other goods. Previously, the European Commission
-- the EU's executive and trade authority -- had suggested revoking
old WTO settlements to rapidly retaliate against $4 billion of U.S.
exports.
For a lot of EU governments, dealing with the short-term pain of
U.S. levies over the Airbus case is preferable to provoking Mr.
Trump into triggering auto duties, an EU official said.
"It's very quiet on car tariffs, that's very good news," an EU
diplomat said Thursday. "The appetite of the U.S. to take those
tariff decisions has diminished."
Coping with fresh U.S. duties over Airbus, however, will be hard
to swallow for exporters caught in the crossfire of the 15-year
trans-Atlantic battle over aircraft subsidies.
Washington strategically crafted its list to hit exporters
across the EU, and particularly in the four countries that make up
the Airbus consortium -- Britain, France, Germany and Spain.
Of the U.K. products targeted by the U.S., single-malt Scotch
whisky makes up more than half of the total value -- more than $460
million, according to the Scotch Whisky Association, a trade
organization.
"The U.S. is our largest and most valuable single market," SWA
Chief Executive Karen Betts said, citing some $1.25 billion in
annual exports. "It will undoubtedly damage the Scotch whisky
sector."
Last year, EU governments rallied behind a Brussels plan to
swiftly hit back at U.S. steel and aluminum tariffs, but now, EU
businesses from countries outside the Airbus consortium are crying
foul.
"We are dispirited by the tariffs because they are unjustly
hitting Italy, which has nothing to do with the Airbus consortium
and finds itself paying a truly absurd price," said Nicola
Bertinelli, president of the Parmigiano Reggiano Cheese
Consortium.
The latest tariffs will nearly triple U.S. levies on the cheese
to $2.70 per pound, pushing the retail price in the U.S. to more
than $20 a pound the full tariff is passed on to consumers.
Exporters are also mobilizing to counter the effect of U.S.
tariffs across the bloc. French wine producers will ask Paris to
cover the damages they will incur on more than $1 billion of annual
exports to the U.S., said Antoine Leccia, president of the
Federation of French Wines and Spirits Exporters.
Despite the EU's current restraint, the threat of escalation
persists. European officials warned the EU would hit back if U.S.
duties are still in place when the bloc receives its WTO award in
the Boeing case.
"I appeal to the United States' sense of responsibility, so that
we can find the path to a mutual agreement," French Finance and
Economy Minister Bruno Le Maire said on Thursday. Barring a
settlement, he said, "the European Union will be ready to
react."
--Saabira Chaudhuri in London, Eric Sylvers in Milan, and
Matthew Dalton and Noemie Bisserbe in Paris contributed to this
article.
Write to Emre Peker at emre.peker@wsj.com
(END) Dow Jones Newswires
October 03, 2019 15:39 ET (19:39 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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