On 15 and 16 May, the parties involved in the dispute (DS 316) over EU support for the European aircraft manufacturer Airbus (see EUROPE 12020/7) took turns in front of the Office of the US Trade Representative (USTR) in Washington. While the aviation industry in the United States has shown little enthusiasm for tariff measures on European products, producers in the agri-food sector seem instead to see benefit in them.
In this dispute, which is more than 15 years old, Washington can opt either for an amicable settlement or for tariff sanctions against the EU, knowing that, in a few months' time, the EU will be able to take its own measures in its dispute (DS 353) against American aircraft manufacturer Boeing (see EUROPE 12238/1). Robert Lighthizer’s Office estimates these subsidies at about $11 billion, or €9.8 billion per year.
Caution in the aeronautics industry
The European aircraft manufacturer, supported by the Aerospace Industries Association (AIA) in the United States and various subcontractors, called for caution regarding the impact on US aerospace industry supply chains and urged Washington to opt for a negotiated solution with the EU. This trade dispute “is now threatening to become a conflict that will directly, negatively and severely impact the entire aerospace industry, including suppliers, airlines and passengers”, an Airbus representative told EUROPE. “Such self-inflicted wounds do not serve American or European economic interests, but instead provide advantages for industrial competitors from elsewhere.”
The European aircraft manufacturer has a production site in Alabama, and two Alabama politicians also spoke out against these sanctions. Representatives of Airbus and Airbus Helicopters highlighted the significant investments and jobs generated by their production sites, not only in Alabama, but also in Texas and Mississippi.
As for the Boeing representative, he allegedly called for a 100% duty on finished Airbus aircraft and certain spare parts. However, according to several American media reports, the American aircraft manufacturer reportedly mentioned to the USTR the negative impact that broader tariff increases would have on the supply chain.
Focus on agricultural products
Representatives of the agri-food sector also testified, since the list of products potentially subject to tariffs includes many of these products.
For example, National Milk Producers Federation President Jim Mulhern called on Washington at the hearing to impose tariff sanctions on dairy products from the EU. “We have a unique opportunity to make a big dent in the dairy market access gap [...] Including EU cheeses, yogurt and butter on the list [...] is entirely warranted, and we would encourage you to add additional EU dairy-related tariff lines”, he added, according to the trade journal Hoard's Dairyman.
With the EU insisting on its opposition to negotiating any opening of its agri-food market in the upcoming transatlantic trade negotiations (see EUROPE 12236/12), the opportunity to offer some compensation to the sector could indeed tempt President Donald Trump.
The latter could see this tariff increase as a bubble of air, given that new Chinese retaliation measures are emerging in the trade war now being waged between China and the United States.
The North American Olive Oil Association (NAOOA) said it would oppose any tariff increase due to US dependence on European imports, according to the Olive Oil Times.
The amount of support estimated by Washington is still subject to WTO arbitration, the outcome of which is expected in the summer of 2019. (Original version in French by Hermine Donceel)