The European Union’s (E.U.’s) newly appointed Commissioner of Trade – Valdis Dombrovskis has asked the United States (U.S.) to withdraw tariffs on E.U. products worth U.S. $ 7 billion or pay additional duties for exporting goods to Europe.
These tariffs relate to a 15-year old dispute between Airbus SE, a European multinational aerospace corporation and Boeing, an American multinational corporation that designs, manufactures, and sells airplanes, rotorcraft, rockets, satellites, telecommunications equipment and missiles worldwide.
After being appointed on Wednesday, October 7, 2020, Validas said that repairing the transatlantic relationship would be his top priority and that the U.S. must withdraw its Airbus-related tariffs as a confidence-building measure.
Speaking on the occasion, Validas said, “Of course, if the US is not withdrawing their tariffs, we have no choice but to then introduce our tariffs.”
He further added, “In any case, it’s clear: if we are not seeing clear movement from the US side on withdrawing or at least suspending their tariffs, this will not require much delay from our side.”
As far as the Airbus-Boeing dispute goes, both E.U. and U.S. claim that each other’s airplane manufacturer is unfairly subsidized. In 2006, U.S. approached World Trade Organization (WTO), claiming that the Airbus, which is jointly owned by Germany, France, Spain and Britain’s BAE Systems, had received $ 22 billion (€19.4 billion) in illegal subsidies. The U.S. estimated that the subsidies had resulted in an economic benefit of more than $ 200 billion.
In response, E.U. filed a counter case, alleging that Boeing had received $ 23 billion in trade-distorting subsidies in the U.S., for its research and development projects. Over the years, the WTO ruled that both sides unfairly subsidized their aircraft makers.
In 2019, the World Trade Organization (WTO) allowed U.S. to impose tariffs on E.U. imports in its case against Airbus. The U.S. imposed 25% tariffs on items ranging from French wines to Italian cheeses and German machine tools. It also imposed 10% tariffs on most European-made Airbus jets. In mid-February 2020, the U.S. said it would increase tariffs on aircraft imported from the E.U. to 15% from 10%.
The WTO has also permitted E.U. to impose tariffs on U.S. products worth U.S. $ 4 billion to retaliate against subsidies for Boeing. E.U. would be imposing these tariffs on U.S. aircrafts, diggers, casino tables, fitness machines and sensitive agricultural goods such as blueberries.
Validas’s predecessor – Phil Hogan resigned in August 2020 over alleged violations of Coronavirus (COVID-19) lockdown rules. Hogan’s last act in office was to seal the first tariff-reduction deal between the E.U. and U.S. in 20 years, notably including the elimination of duties on U.S. lobster. While Validas praised the said agreement, he also iterated that little scope was left for such “mini-deals” on tariffs given the two sides’ different negotiating objectives. E.U. doesn’t want to discuss agriculture and this is precisely what U.S. wants to discuss.
“I would not be expecting new mini-deals like the lobster deal, for the reason that our negotiating mandates are not matching,” said Validas.
Separately, the President of U.S. – Donald Trump has placed additional tariffs on E.U. steel and has repeatedly warned of targeting the 4-wheeler industry.
