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World Trade Organization says EU can impose tariffs on $4B of US goods

Washington Examiner logo Washington Examiner 10/13/2020 Tyler Van Dyke
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The World Trade Organization determined Tuesday that the European Union may impose tariffs on up to $4 billion worth of U.S. goods annually, settling a yearslong dispute regarding illegal tax exemptions and exclusions granted to Boeing.

In 2005, the EU brought a dispute to the World Trade Organization concerning a number of measures afforded to Boeing, including payments to Boeing by NASA and the Department of Defense related to research and development contracts, tax exemptions, and tax reductions from Washington state and Wichita, Kansas, according to Tuesday's WTO report.

What ensued was a 16-year fight between the United States and the EU to determine damages that had been incurred by the EU and its Airbus planes and the damages that would be incurred by the U.S., a process involving numerous reports, appeals, suspensions, and recommendations.

On May 6, 2020, the U.S. "informed the [dispute settlement body] of its compliance in this dispute ... submitt[ing] that it had therefore fully implemented the DSB's recommendations in this dispute," according to the WTO's website.

However, in 2019, arbitration had been resumed after a 7-year suspension requested by the U.S. Despite the U.S.'s claim to have implemented recommendations fully, the length of time between the initial complaint and the resolution led the arbitrator to find that the EU could impose the tariffs.

However, the EU cannot impose those tariffs immediately. According to the New York Times, the EU will have to request an authorization from the WTO now that it has the WTO's approval. It cannot request such an authorization until Oct. 26 at the earliest.

Any tariffs would come at a difficult time for the airline industry and American companies across the board. Still reeling from the coronavirus lockdowns and a lack of federal aid, American Airlines and United Airlines have collectively furloughed more than 30,000 workers. Boeing likewise has struggled to recoup losses related to the grounding of its 737 MAX fleet.

The ruling in favor of the EU mirrors a ruling from October 2019 in which the WTO sided with the U.S. in its request to impose tariffs on European goods to retaliate for subsidies the EU had provided to Airbus during the production of its airliners. In that dispute, the WTO allowed the U.S. to impose tariffs on up to $7.5 billion worth of European goods.

It's unclear whether the EU will request the subsidies during the Oct. 26 meeting. Bloomberg reports that "the bloc will likely hold off until after the Nov. 3 election in the U.S. to see if a deal is possible" with a Biden administration.

“Probably under a new administration it would be easier because we know that the Trump administration is unfortunately supporting this unilateral action in areas of trade which is creating lots of tensions and lots of problems,” EU trade chief Valdis Dombrovskis told members of the European Parliament earlier this month.

Tags: News, Trade, Tariffs, European Union, Boeing

Original Author: Tyler Van Dyke

Original Location: World Trade Organization says EU can impose tariffs on $4B of US goods

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