Latest U.S. Tweak In Airbus-Related Trade Penalties Keeps Status Quo

generic Airbus A380
Credit: Rob Finlayson

WASHINGTON—The latest U.S. Trade Representative’s (USTR) tweaks to U.S. trade penalties against Europe satisfy nobody but at least do not further flame tensions between the two sides as they continue to quasi-negotiate a way out of their large commercial aircraft subsidy dispute at the World Trade Organization (WTO).

“USTR is removing from the tariff list certain products from Greece and the United Kingdom and adding an equivalent amount of trade from France and Germany,” the office said Aug. 12. “The changes are modest; the amount of products subject to countermeasures will remain unchanged at $7.5 billion and the tariff rates will remain unchanged at 15% for aircraft and 25% for all other products.”

The modifications will take effect on Sept. 1, potentially weeks or days ahead of a long-expected WTO ruling that will clear Europe to impose trade penalties on the U.S. for illegal subsidies provided to Boeing. The U.S. penalties on Europe, for illegal subsidies to Airbus, were imposed in October 2019 and then changed in February after a statutory review. U.S. law further requires a review—and, in turn, possible changes—every 180 days thereafter, hence the Aug. 12 announcement.

“The EU and member states have not taken the actions necessary to come into compliance with WTO decisions,” USTR Robert Lighthizer said. “The U.S., however, is committed to obtaining a long-term resolution to this dispute. Accordingly, the United States will begin a new process with the EU in an effort to reach an agreement that will remedy the conduct that harmed the U.S. aviation industry and workers and will ensure a level playing field for U.S. companies.”  

U.S. alcohol and food importers of targeted European goods have been lobbying the Trump Administration to ease off on using their markets as billpayers for the U.S. penalties on Europe. “We appreciate that USTR has decided not to further escalate tariffs on distilled spirits products, and we hope that this decision sets the stage for the U.S. and EU to quickly find a path forward to resolve these longstanding trade disputes,” the Distilled Spirits Council of the United States said after the latest announcement.

Airbus has claimed it is remedying the benefits of illegal subsidies decided in the first of two dueling WTO cases, which resulted in the U.S. penalties. In July, the European OEM said it would further speed up loan repayments to France and Spain in the hopes of prodding more U.S. willingness to settle the disputes. At the same time, Airbus continues to point to what are expected to be WTO-approved penalties against the U.S. under the second of the dueling cases, with a decision that was previously expected by June but has been delayed to this fall in part due to the COVID-19 pandemic.

“Airbus profoundly regrets that, despite Europe’s recent actions to achieve full compliance, USTR has decided to maintain tariffs on Airbus aircraft—especially at a time when aviation and other sectors are going through an unprecedented crisis,” Airbus reportedly said after the Aug. 12 USTR announcement. “Airbus trusts that Europe will respond appropriately to defend its interests and the interests of all the European companies and sectors, including Airbus, targeted by these tariffs.”

Michael Bruno

Based in Washington, Michael Bruno is Aviation Week Network’s Executive Editor for Business. He oversees coverage of aviation, aerospace and defense businesses, supply chains and related issues.