With $7.5 billion/year in penalties on European Union imports pending implementation, the U.S. Trade Representative's office expressed indifference to an Airbus call for the U.S. to reduce the value of the tariffs by $2 billion. The World Trade Assn. ruled in October that the EU illegally subsidized the Airbus A380 and A350 jet programs, a decision upheld this week following an appeal.
After the October decision, the U.S. identified a list of imports to be levied with the penalties, though some Airbus component parts were left unpenalized.
After the December 2 appellate ruling, U.S. Trade Representative Robert Lighthizer stated: "In light of today's report and the lack of progress in efforts to resolve this dispute, the United States is initiating a process to assess increasing the tariff rates and subjecting additional EU products to the tariffs.
"Strong action is needed to convince the EU that its interest lie in eliminating these market-distorting subsidies now and in the future so that our industries can compete on a level playing field," Lighthizer continued.
The statement may be designed to initiate new discussions of a trade settlement. Next year WTO will rule on a separate case brought by the EU versus the U.S., alleging unlawful federal and state subsidization of Boeing aircraft programs. Both the EU and U.S. trade representatives have endorsed the idea of a negotiated settlement over the issues at stake, but each side maintains the other is not cooperating toward that outcome.
The present case is rooted in a 15-year-old charge by the U.S. that the EU's support for Airbus wide-body jet programs unlawfully damaged the profitability and market prospects of Boeing Co.'s wide-body jets, specifically the 747 and the 787 Dreamliner.
This week the WTO appellate panel acknowledged an EU claim that the Airbus decision to cancel its A380 program by 2021 would mean no further damaging effect on sales of Boeing's 747 jet, but it determined that the Airbus aircraft would continue to damage to Boeing's wide-body jet market share as long as it is produced and delivered.
In its response to the appellate ruling, Airbus stated: "As a result of the panel’s findings, the U.S. should immediately reduce the $7.5 billion in tariffs that the WTO authorized to the U.S. in October by around $2 billion. This is the direct result of the panel finding that the loans for the development of the A380 no longer have an impact on Boeing sales, and that therefore the value of the lost sales no longer exists."
“Nothing in today’s report even suggests that the (WTO) compliance panel found that the amount has decreased,” according to a USTR spokesman, responding to the Airbus statement. “There is accordingly no basis for Airbus’s assertions that the report ‘implies’ that the U.S. countermeasures should be reduced by $2 billion.”
