US offers tariff truce if Airbus repays billions in aid

Cheryl Sanders
October 18, 2020

The World Trade Organization ruled Tuesday that Brussels could impose tariffs worth $4.0 billion on United States imports in retaliation for illegal American aid to Boeing. In 2019 US President Donald Trump imposed taxes on various European goods including planes, wine and cheese, after the WTO gave the US the option to counter on up to $7.5 billion of annual European exports.

But the offering to clear the air. The European Union has long demanded government subsidies for the U.S. aircraft manufacturer Boeing It was unfair.

U.S. officials said they were willing to settle the long-running aircraft subsidy row if plane manufacturer Airbus paid back billions it received in handouts from European governments.

The loans stand at the centre of a 16-year-old dispute that has bedevilled trade relations and spread to industries from luxury goods to agriculture as the two sides seek to punish aircraft subsidies with tariffs.

The EU's draft retaliation list aims to target politically sensitive USA industries for Trump and his Republican allies in Congress, such as aircraft, coal, farm products and seafood.

Representatives from the office of U.S. Trade Representative Robert Lighthizer, European Commission and the EU executive did not immediately respond to requests for comment.

The offer is not likely to fly with the E.U. One European source called the US proposal "insulting".

Meanwhile, the EU-which has drawn up a list of American products that will face tariffs-will likely hold fire until after the USA presidential election on November 3, according to three officials familiar with the bloc's thinking.

A USA source said Washington was "serious" about getting Airbus to repay aid.

On October 13, the WTO arbitrator issued its decision on the level of counter-measures the European Union may request with respect to the United States in relation to the Boeing case.

"While trade tensions between United States and European Union are complex, with serious issues on both sides, punitive tariffs cause irreparable harm to companies of all sizes and weaken their entire supply chains, at a time when growth and job creation are most needed".

Airbus said the disputed system favoured taxpayers because loan repayments on successful jets such as the A320 far outweighed amounts written off on jets that failed to reach sales targets.

Washington argues that merely addressing future types of support would fail to resolve ongoing harm to Boeing caused by the presence on the Airbus balance sheet of past loans that it can still use to develop jets and offer unfairly low prices.

Although the United States would not benefit directly from increased repayments by Airbus to European states, U.S. sources say that Boeing would benefit indirectly if Airbus finances were purely market-based.

European sources say that Boeing would also have to hand back billions if the same philosophy were applied to the United States plane maker.

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