The US Come To The Aid of Boeing With a List of Potential Tariffs

Home » The US Come To The Aid of Boeing With a List of Potential Tariffs

While the deal with China is not finalized or disclosed yet, the US trade representatives have switched target to pursue another tariff war. The target this time is the European Union, and Airbus is #1 on the wanted list.

The United States Trade Representative published a preliminary list that proposes a $11bn worth of tariffs on products from the EU ranging from wine to passenger airplanes. The agency explicitly stated that the weighing of such tariffs are directed against the Airbus.

The European aerospace corporation is the manufacturer of the wide-body A320, the main rival of Boeing’s 737 Max on the global market. The sales of Boeing’s single-aisle passenger plane have received a heavy blow when two fatal crashes raised concerns on the re-engined model’s safety.

A320 is the main competitor of the Boeing plane on a market with potential sales of 5000 planes in the next two decade.

To honor a long-looming threat

The USA took case of subsidies to the WTO many times in the last 14 years. Another WTO-ruling last year strenghtened Boeing’s position that Airbus SE indeed had received and continued to receive ’ impermissible financial support’, loans with below market interest rates from EU states. Airbus used these sources to help the development and launch of the A380 and the new A350 families. A similar WTO ruling exists for the A380 and A350.

Boeing claims that the ’adverse effects’ of EU subsidies caused $11 bn worth damage. The question of state subsidies is the cause of the long-time feud between the two main supplier of large civil aircraft while both sides keep accusing the other with breaching the WTO agreement on subsidies.

Trade Representative Robert Lighthizer said that the US was going for an agreement that would end all ’WTO-inconsistent’ subsidies.
The tariff list was met with a cold reception by the EU. Bernd Lange, chairman of European Parliament Committee on International Trade fired back on the same day with declaring to Bloomberg.com that it was impossible to negotiate under such circumstances. The EU does not walk out, but any future comprehensive agreement should be based on de-escalation and cooperation, not confrontation. Lange added they had had a clear agreement with Trump on agriculture products before.

On Huawei, Lange cited a lack of evidence for intentionality, but remarked that the Eu had to prove that there were ’no hidden’ mechanisms.

Source: https://www.reuters.com/article/us-usa-trade-eu-tariffs/u-s-proposes-list-of-eu-goods-for-tariff-retaliation-against-airbus-subsidies-idUSKCN1RK2KE
https://www.bloomberg.com/news/videos/2019-04-09/not-possible-to-negotiate-with-u-s-under-tariff-threat-says-european-parliament-committee-s-lange-video

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