Tariffs linked to long-running dispute over European subsidies for Airbus

Tariffs linked to long-running dispute over European subsidies for Airbus

Dutch cheese, Spanish olive oil and British biscuits are among the European food and drink products set to face additional US tariffs following a World Trade Organization ruling.

The WTO said yesterday (2 October) the US could levy a 25% tax on imports of food, beverages and other goods as part of Washington's long-running complaint over European subsidies to plane maker Airbus.

An eight-page list of goods detailing the products to face the tariff was released by the US government yesterday, with butter, yogurt, fruit, meat and seafood among the foods from Europe set for the levy.

The US administration says the new tariffs are designed to allow the country to claw back some of the losses Airbus' American competitor Boeing has accrued.

"For years, Europe has been providing massive subsidies to Airbus that have seriously injured the US aerospace industry and our workers. Finally, after 15 years of litigation, the WTO has confirmed that the United States is entitled to impose countermeasures in response to the EU's illegal subsidies," US Trade Representative Robert Lighthizer said. "Accordingly, the United States will begin applying WTO-approved tariffs on certain EU goods beginning October 18. We expect to enter into negotiations with the European Union aimed at resolving this issue in a way that will benefit American workers."

Washington said the levy is set to hit US$7.5bn worth of imports, with the "bulk" applied to goods coming from France, Germany, Spain and the UK. The US said the four countries were "responsible for the illegal subsidies".

In 2004, the US brought a WTO challenge to EU subsidies, after failed attempts to convince the EU, as well as France, Germany, Spain and the UK, to cease their subsidisation of Airbus.

In 2011, the WTO found that the EU provided Airbus with $18bn in subsidised financing from 1968 to 2006. It also found that European "launch aid" subsidies were vital in allowing Airbus to launch every model of its large civil aircraft; this then made Boeing lose sales of more than 300 aircraft and market share throughout the world, the US claims.

However, the WTO has also, at times, censured the US for support for Boeing.