EU Threatens To 'act Decisively' In Tariff Fight With US Over Aviation Subsidies

08/07/2020 12:00 - 38 total view

The EU has threatened to “act decisively” if the United States puts new tariffs of its goods amid heightened tension over subsidies to the home aviation market.

The European Union has threatened to “act decisively” if the United States puts new tariffs of its goods amid heightened tension over subsidies to the home aviation market. The US and the EU have been at loggerheads over tax breaks, research grants and other aid to plane makers and the World Trade Organisation (WTO) has already ruled that subsidies given to Airbus were illegal.

After the WTO ruling, the United States imposed tariffs of 15-25 per cent on $7.5 billion worth of European products and it is considering new taxes on additional EU trade worth $3.1bn annually. However, the United States has reportedly rejected the move to settle the dispute.

Meanwhile, the international trade regulator is now looking into a case of alleged illegal support to US aerospace firm Boeing which could prompt the EU to take retaliatory measures over American goods. Europe's trade commissioner Phil Hogan told the European Parliament's trade committee on July 6 that the bloc is ready to act decisively and strongly if they don’t the desired outcome. 

"I want to reassure people that we are ready to act decisively and strongly on the European Union side if we don't get the type of outcome that we expect from the United States in relationship to finalising this 15-year-old dispute,” said Hogan.

'Totally unacceptable'
Hogan also criticised the US investigations, known as 232 investigations, against EU goods, and warned of retaliation. Calling it “totally unacceptable”, he said that the European Union will have to stand together and act as well if the investigations go further. "It's not appreciated the number of 232 investigations that have been launched in recent weeks, perhaps this is political, perhaps it's more real," Hogan said.

In a debate with Hogan, Trade MEPs emphasised that trade policy must help the EU stand on its economic feet and spread its values such as rule-based, fair and open trade. Christophe Hansen warned that if the EU cannot protect itself from unfair competition, it will quickly lose the support of Europeans.