The United States is relaunching its “carousel” of tariff countermeasures in the Airbus dispute, proposing new products for public consultation on Friday 26 June that could be subject to tariff sanctions. They are profiting from their advantage over the European Union, which is waiting for its turn to apply its own tariffs in the dispute over the aircraft manufacturer Boeing.
Under Section 301 of the US trade legislation, the Office of the US Trade Representative (USTR) has initiated a review of the tariff measures adopted in the dispute over the European aircraft manufacturer Airbus ( see EUROPE 12448/24, 12427/10, 12350/17, 12348/7).
In essence, at the end of the 15-year dispute, Washington had been authorised by the World Trade Organisation (WTO) to apply sanctions to the European Union for up to a maximum limit of $7.5 billion (€6.7 billion).
According to an already well-established principle of “carousel” retaliation, the administration now intends to proceed with a regular rotation of the goods targeted by its tariffs. This system is designed to impose a maximum of damage on the trading partner whose compliance it considers insufficient.
The consultations, which open on 26 June for 1 month, should help to determine whether it is appropriate to continue or even increase additional duties of “up to 100%” on products already subject to sanctions (Annex 1), to sanction products previously identified but not yet subject to tariffs (Annex 2) or to include new products (Annex 3) (https://bit.ly/382Wrl6 ).
Agri-food in distress
Among exporters of agri-food products to the United States, Italy is particularly concerned about the review of these sanctions. “The country finds itself punished by American duties while the dispute between Boeing and Airbus (...) is essentially a Franco-German project to which Spain and the United Kingdom have been added”, deplored Coldiretti, Italy's main agricultural organisation, in a press release published on 25 June.
Deploring the heavy price paid by agricultural products, the association fears that this revision could affect two flagship products of Italian agri-food exports to the United States: wine and olive oil. Internal consultations made it possible to remove these products from the first list, recalls Coldiretti. “Now, however, in the middle of the election campaign, Trump seems to ignore solicitations from inside and outside the United States”, the Italian representative said. In total, two thirds of the value of Italian agri-food exports across the Atlantic could be affected, Coldiretti estimated.
“All diplomatic energies must be used to overcome the unnecessary conflicts that threaten to jeopardise the recovery of the world economy, which has been badly hit by the coronavirus outbreak”, urged its president, Ettore Prandini, stressing the importance of defending a strategic sector of the EU “which is paying a very high bill for trade disputes that have nothing to do with the agricultural sector”.
The new list of products (Annex 3), on the other hand, covers only the four countries concerned: coffee, confectionery, pastries, beer and lorries are among the products originating from Germany, Spain, France and the United Kingdom which could, in turn, be penalised on the US market.
The USTR's decision is expected around 12 August.
Boeing “delayed”
In the meantime, the EU's patience is being severely tested. It should soon be in a position to apply its own tariff measures on US products in the context of its twin dispute with Washington over the US aircraft manufacturer Boeing. In fact, the WTO Dispute Settlement Body had, in this case too, found the existence of subsidies and then of shortcomings in their compliance (see EUROPE 12483/17, 12352/16, 12224/20, 11805/10).
The list of countermeasures is ready, but the WTO report is still pending (see EUROPE 12238/1). A Geneva source, interviewed by EUROPE, admitted that no timetable could be confirmed at this time. The EU will probably have to chafe at the bit at least until September. (Original version in French by Hermine Donceel)