U.S. moves to impose tariffs on EU aircraft
The Office of the United States Trade Representative (USTR), which serves as that government’s agency to negotiate foreign trade agreements, resolve disputes and set policy, issued a statement on April 8 that it intends to impose what it describes as new countermeasures to longstanding European Union subsidies.
The USTR released a preliminary list of EU products it might impose tariffs on, if subsidies are not stopped. That list includes a range of helicopters, aerostructures, and primarily commercial fixed-wing aircraft, as well as a range of food products from Swordfish steaks and cheeses to yogurt and wine. EU products like printed books, papers, carpets and clothing are also on the list, published with a statement of its reasoning. (USTR’s preliminary list of aerostructures and aircraft, categorized by weight and purpose, are presented at the end of this article.)
The United States contends the current EU subsidies affect approximately US$11.2 billion (14.9 billion) of trade per year. The USTR notes the exact amount of trade affected is still under arbitration is expected from the World Trade Organization (WTO) sometime this summer; and that its current push to impose additional countermeasure tariffs is in preparation for that day, again unless the EU removes what the U.S. views as unfair subsidies.
“Our ultimate goal is to reach an agreement with the EU to end all WTO-inconsistent subsidies to large civil aircraft,” said U.S. Trade Representative Robert Lighthizer, noting the dispute has been in litigation at the WTO for 14 years. “When the EU ends these harmful subsidies, the additional U.S. duties imposed in response can be lifted.”
In its April 8 statement, the USTR specifically targets subsidies provided to Airbus, which the government agency states to have caused adverse effects to the United States: “After many years of seeking unsuccessfully to convince the EU and four of its member States (France, Germany, Spain, and the United Kingdom) to cease their subsidization of Airbus, the United States brought a WTO challenge to EU subsidies in 2004. In 2011, the WTO found that the EU provided Airbus [US]$18 billion in subsidized financing from 1968 to 2006.”
The USTR continues to explain the WTO found that European subsidies were leveraged for Airbus to launch “every model of its large civil aircraft, which caused Boeing to lose sales of more than 300 aircraft and market share throughout the world.” In particular, the USTR points to what it describes as more than US$5 billion in new subsidized financing for the A350 XWB – using the term “launch aid”.
USTR then points to what is classified by the WTO as an appellate report issued in May 2018 that found EU subsidies worth billions of dollars for twin-aisle aircraft. In this report, USTR states “launch aid” provided for the A350 XWB and A380 caused significant lost sales to Boeing 787 and 747 aircraft. The trade agency continues to state Boeing lost market share for its large aircraft in specific markets, including the EU, Australia, China, Korea, Singapore, and UAE.
Once the WTO arbitrator issues its report on the value of countermeasures, USTR explains it will announce a final product list covering a level of trade that counters what it describes as adverse affects from the subsidies.
The preliminary products that the USTR might cover by additional duties contains a number of products in the civil aviation sector, listed by TWO reporting category, including:
• New helicopters, non-military, of an unladen weight not exceeding 998 kg;
• New helicopters, non-military, of an unladen weight exceeding 998 kg but not exceeding 2000 kg;
• New helicopters, non-military, of an unladen weight exceeding 2,000 kg;
• New aircraft, passenger transports, non-military, of an unladen weight exceeding 15,000 kg;
• New aircraft, cargo transports, non-military, of an unladen weight exceeding 15,000 kg ;
• New aircraft, non-military, nesoi (including passenger/cargo combinations), of an unladen weight exceeding 15,000 kg ;
• Undercarriages and parts thereof for use in new civil aircraft, not for use by the Department of Defense or the U.S. Coast Guard, of an unladen weight exceeding 15,000 kg ;
• Fuselages and fuselage sections, predominantly aluminum wings and wing assemblies, and horizontal and vertical stabilizers for use in new civil airplanes, not for use by the Department of Defense or the U.S. Coast Guard, of an unladen weight exceeding 15,000 kg ; and
• Other parts, nesoi, for use in new civil aircraft, not for use by the Department of Defense or the U.S. Coast Guard, of an unladen weight exceeding 15,000 kg.