in Aerospace

WTO arbitrator issues aircraft subsidy dispute decision

Posted 2 October 2019 · Add Comment

Today, a World Trade Organisation (WTO) arbitrator issued a decision on the level of countermeasures the United States may request with respect to the European Union and certain EU member states in 'European Communities and Certain member States — Measures Affecting Trade in Large Civil Aircraft' (DS316).


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The WTO announced the levels of tariffs authorised on imports of products into the United States (US) from the European Union (EU), following its ruling on a case brought by the US against the European Union in a dispute over trade in large commercial aircraft manufactured by Airbus. A further ruling in the case brought by the EU against the US over support for Boeing is expected in the coming months.

ADS Chief Executive Paul Everitt said: “Trade disputes and tariffs disrupt healthy competition, threaten jobs and risk reducing the choice available to consumers, both in the aerospace market and the wider global economy.

“It is in the interest of the whole global aerospace industry that a negotiated solution is found to this dispute, removing the threat of tariffs. This is a sector where low tariffs have helped manufacturers deliver safe, advanced and increasingly fuel-efficient aircraft to our customers around the world.

“We urge the EU and US authorities to work together to find a mutually beneficial solution that sustains open and competitive markets.”

Airbus noted the decision of the World Trade Organization (WTO) regarding the level of countermeasures it authorises the United States to impose on products from the European Union (EU) and in a statement it said if the United States Trade Representative (USTR) chooses to impose tariffs on the importation of aircraft and/or aircraft components, this will create insecurity and disruption not only to the aerospace industry but also to the broader global economy. Yet it is still avoidable.
 
Airbus CEO Guillaume Faury stated: “Airbus will continue working with its US partners, customers and suppliers, to address all potential consequences of such tariffs that would be a barrier against free trade and would have a negative impact on not only the US airlines but also US jobs, suppliers and air travelers. Airbus is therefore hopeful that the US and the EU will agree to find a negotiated solution before creating serious damage to the aviation industry as well as to trade relations and the global economy.”
 
In the coming months, the WTO will determine the amount of tariff countermeasures the EU can impose on US products – including imported Boeing aircraft – in the parallel counter case regarding illegal subsidies to Boeing. The WTO has already found that the US failed to address illegal subsidies causing harm to Airbus. This will provide the EU with grounds to claim countermeasures on US products at a level that could exceed US sanctions.
 
Airbus says that if these tariffs are applied on both sides it will severely impact US and EU industries, putting high costs on the acquisition of new aircraft for both US and EU airlines. Aviation is a global industry. Evidence of that is the fact that close to 40% of Airbus’ aircraft-related procurement comes from US aerospace suppliers. This US supply chain supports 275,000 American jobs in 40 states through spending that has totaled $50 billion in the last three years alone. If tariffs are applied, the entire global industry will be harmed. The only way to prevent the negative effects of these tariff would be for the US and EU to find a resolution to this long-running dispute through a negotiated settlement. Airbus continues to encourage the US Administration and the European Commission to find a settlement to this dispute, and thereby preserve the free, fair competition and open trade that have proven beneficial to the public and essential for a successful and growing global aviation industry.

 

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