BUSINESS EU set to get WTO green light for Boeing tariffs

BUSINESS

EU set to get WTO green light for Boeing tariffs

AFP

18:25, October 13, 2020

In this Dec. 11, 2019, file photo, an United Airlines Boeing 737 Max airplane takes off in the rain at Renton Municipal Airport in Renton, Wash. Boeing said Tuesday, Jan, 7, 2020. (File photo: AP)

One year after sanctioning the EU for its support of Airbus, the World Trade Organization is expected Tuesday to let the bloc impose retaliatory sanctions over US aid for Boeing.

In the latest development in the 16-year saga between Washington and Brussels over support for their aircraft manufacturers, the EU is expected to get the green light to impose around $4.0 billion in tariffs on US goods and services, according to the Bloomberg news agency.

According to a list of targets seen by AFP, the European Union is expected to impose tariffs on aircraft made in the United States, along with tractors, sweet potatoes, peanuts, frozen orange juice, tobacco, ketchup and Pacific salmon.

The EU and the United States accuse each other of having provided illegal state aid to their respective aircraft manufacturers, and both brought claims before the WTO's trade resolution body.

Last year, the WTO authorised $7.5 billion in US sanctions against European goods and services.

It was the biggest amount authorised to date by the WTO and was a result of EU aid to Airbus that was deemed improper under international trade regulations.

Washington then imposed punitive tariffs of 25 percent on EU products such as wine, cheese and olive oil. The 10 percent tariff on Airbus planes was hiked to 15 percent in March.

Once cleared by the WTO, the EU could impose its retaliatory tariffs from October 27, a week before the US presidential election. 

While several EU leaders have been calling for imposing the tariffs immediately if Washington does not agree to drop its levies, few expect it to do so. 

One industry source however expects the WTO ruling to "open the door for negotiations".

Given the crisis the airline industry now finds itself in and the effect that is having on Airbus and Boeing, a long drawn-out battle in which tariffs raise the prices of aircraft does not serve the interests of either the EU or the United States.

That is even more the case for Boeing, which will be looking forward to resuming sales of the 737 MAX once it is cleared to resume flights.

The aircraft has been grounded since March 2019 following two deadly crashes that killed 346 people.

Any tariffs would make the several hundred aircraft ordered by European airlines even more expensive.

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