Europeans continue to argue for a negotiated solution with the United States in the trade dispute involving their respective aircraft manufacturers, Airbus and Boeing while warning Washington that they will respond if they are forced to do so, after the WTO gave its green light on Wednesday 2 October to the imposition of US tariff sanctions of $7.497 billion per year (see EUROPE 12339/10).
Applying sanctions would be a "short-sighted and counterproductive" action, which would penalise the economy on both sides of the Atlantic, said Trade Commissioner Cecilia Malmström, while the WTO has shown that both the European Union and the United States have granted illegal state aid to their aircraft manufacturers.
She recalled that the EU had "constantly" put forward its willingness to achieve a "fair and balanced solution", which took into account the specificity of the aviation sector. An American reaction to the European proposals sent in July is expected.
"But if the U.S. decides to impose WTO authorised countermeasures, it will be pushing the EU into a situation where we will have no other option than do the same", Malmström warned.
In April, the EU published its list of US products eligible for tariff sanctions in the Boeing case (DS 353) that could enter into force in Spring 2020 (see EUROPE 12238/1).
On Wednesday, the WTO set the level of countermeasures that the US could request from the EU and some Member States in the Airbus case (DS 316) at nearly $7.5 billion per year.
The United States, which wants to convene an extraordinary WTO panel on Monday 14 October in Geneva, can either decide to sanction the four EU countries that produce aircraft components or attack the 28 EU Member States indiscriminately to better divide them.
The willingness to find a negotiated solution to this trade dispute has also been transmitted by the European Parliament's Committee on International Trade to its congressional counterpart. "Concerned" about the consequences of a situation where both sides would lose out, she called for greater transatlantic cooperation to address the threats that China's actions pose to multilateral trade rules.
"Trade wars have no winners," she says in a letter published by Liesje Schreinemacher (Renew Europe, Netherlands).
On the same lines, the European aircraft manufacturer insisted on the damage that this trade war would cause to the American economy. "Close to 40 percent of Airbus’s aircraft-related procurement comes from US aerospace suppliers. This US supply chain supports 275,000 American jobs in 40 states through spending that has totalled $50 billion in the last three years alone," Airbus said in a statement.
Washington confirms imminent sanctions
What the EU has put forward as a basis for a negotiated solution is not sufficient to stop its subsidies and reach a level playing field with the US, US Trade Representative (USTR) senior officials told the media later that same evening.
Washington will therefore proceed with sanctions. The USTR confirmed that it had requested a special meeting of the WTO’s dispute settlement body on October 14.
In the meantime, the USTR will revise its final list of goods that will be subject to tariffs. Based on the evidence gathered and on a "strategic assessment", it has decided to opt for a 10% tariff increase for aircraft and 25% on the rest.
Since the EU is collectively accountable for the decision to subsidise Airbus, the US will apply tariffs to all member states, they added.
Asked about a potential EU reply to these sanctions (imposing retaliatory tariffs by way of using old WTO awards (EUROPE 12339/10)), the official said it would be “ridiculous” to use a case that involves a law that was revoked almost 15 years ago. “We would respond to such move”, he warned.
See the WTO decision: http://bit.ly/2n1rIlE (Original in French by Mathieu Bion and Hermine Donceel)