WTO Clears Way for US Tariff Retaliation in Dispute Over EU Airbus Subsidies
A World Trade Organization appellate body recently found the European Union is not complying with some aspects of earlier WTO decisions against subsidies provided to Airbus, setting the stage for U.S. tariff retaliation unless the EU takes steps to come into compliance. Finally bringing to a close a WTO challenge brought by the U.S. in 2004, the WTO appellate body held the EU has continued to provide illegal subsidies during the period after the WTO found them in violation of WTO agreements.
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As a result of the decision, the U.S. may now ask a WTO arbitrator to resume work it began in 2011 to determine the level of retaliation the U.S. may impose on the EU for the latter’s failure to comply. The arbitrator had suspended its work in 2012 per an agreement between the U.S. and the EU while the WTO compliance case ran its course.
The Office of the U.S. Trade Representative pledged to retaliate if the EU doesn’t end the subsidies. “This report confirms once and for all that the EU has long ignored WTO rules, and even worse, EU aircraft subsidies have cost American aerospace companies tens of billions of dollars in lost revenue,” USTR Robert Lighthizer said in a May 15 statement. “Unless the EU finally takes action to stop breaking the rules and harming U.S. interests, the United States will have to move forward with countermeasures on EU products.”
For its part, the EU also claimed partial victory, and said it would end the “few” remaining subsidy programs singled out in the appellate body report. “Today the WTO Appellate Body, the highest WTO court, has definitively rejected the US challenge on the bulk of EU support to Airbus, and agreed that the EU has largely complied with its original findings,” EU Trade Commissioner Cecilia Malmstrom said. “The EU will now take swift action to ensure it is fully in line with the WTO's final decision in this case. Also, we look forward to the upcoming ruling by the Appellate Body on US compliance with the WTO findings of the massive and persistent government support to Boeing.”
House Ways and Means Committee Chairman Kevin Brady, R-Texas, praised the Trump administration and the role of the WTO in resolving trade disputes. “I applaud the Trump administration and USTR’s legal team for winning one of the largest trade disputes in modern history. For decades, the EU has flouted its WTO commitments at the expense of American aerospace workers and companies. That ends today,” Brady said. “These findings demonstrate the importance of having fully enforceable commitments -- like binding dispute settlement procedures -- in all of our trade agreements. Our workers and companies are the best in the world, and when we have recourse to make sure our trading partners play by the rules, America wins.”