The US government is to maintain tariffs of 15 per cent on Airbus aircraft in a long running dispute over subsidies to the European manufacturer.
Washington has held off its threat to impose higher tariffs on the company’s aircraft and 25 per cent tariffs on other European goods including wine, cheese and olives. The move follows calls by the European Union last month for the tariffs to be scrapped following moves to bring itself into compliance with World Trade Organization (WTO) rulings to resolve the 16-year-old dispute over aircraft subsidies.
Airbus “profoundly regrets” tariff retention
The 16-year-long legal battle between Airbus and Boeing began in 2004 when Washington accused Britain, France, Germany and Spain of providing illegal subsidies and grants to support the production of a range of Airbus products. Airbus said it “profoundly regrets” the US decision to keep tariffs in place on its aircraft. It added: “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.” Airbus’ shares have dropped 2.1 per cent as a result of the announcement.
Last year, the WTO authorised the US to impose tariffs of up to 100 per cent on $7.5 billion in European goods. As a result, Washington imposed the 25 per cent tax levy on a number of EU products. A 10 per cent tariff on Airbus planes was increased to its current level in March.
US commits to long-term resolution of dispute
US trade representative Robert Lighthizer said that the EU had not taken enough action to comply with WTO decisions. He added: “The United States, 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 US aviation industry and workers and will ensure a level playing field for US companies.”
In June, the US threatened to levy tariffs on another $3.1 billion in EU goods. The European Commission has cautiously welcomed “the US decision not to exacerbate the ongoing aircraft dispute.”
EU seeking solution based on “constructive dialogue”
EU Trade Commissioner Phil Hogan has said it would continue to work with Lighthizer to find “a solution based on constructive dialogue and mutual benefits rather than on conflict.”
In a Tweet, the EU added:”The current economic slowdown, specifically its impact on the air travel and aircraft sectors, provide a particular urgency to resolving this dispute.”