EU 'regrettably' hits US with tariffs in 16-year trade fight

The European Union will impose tariffs on up to $US4 billion ($5.5 billion) of US imports in retaliation for US subsidies for Boeing, but said on Monday (Europe time) it was hopeful of an improvement in trade ties under US President-elect Joe Biden.

The move, given the green light by the World Trade Organisation last month, is the latest in a 16-year US-EU dispute over civil aviation subsidies. US tariffs on $US7.5 billion of EU products after a parallel WTO case against Airbus have been in place for over a year.

The EU will impose tariffs of 15 per cent on US exports of planes and parts and of 25 per cent on a range products including tobacco, nuts, fruit juice, fish, spirits, bags, tractors and casino and gym equipment.Credit: EPA

"We have made clear at every stage that we want to settle this long-running issue," EU Trade Commissioner Valdis Dombrovskis told a news conference after an online meeting of EU trade ministers on Monday.

"Regrettably, despite our best efforts (and) due to lack of progress on the US side, we can confirm that the European Union will later today exercise our rights and impose counter-measures awarded to us by the WTO in respect to Boeing."

From Tuesday, the EU will impose tariffs of 15 per cent on US exports of planes and parts and of 25 per cent on a range products including tobacco, nuts, fruit juice, fish, spirits, bags, tractors and casino and gym equipment.

The bloc says its main objective is to persuade the United States to negotiate a solution, arguing the chief beneficiaries of the dispute are competitors such as China's COMAC.

US Trade Representative Robert Lighthizer said the EU's decision was disappointing, but refrained from threatening any US response. Last month, he warned any EU measures would "force a US response", while Donald Trump, who remains US president until January 20, threatened to "strike back harder".

Lighthizer's office said the two sides were in negotiations to resolve the longstanding dispute, but gave no details.

"The United States is disappointed by the action taken by the EU today," he said in a brief statement. "The EU has long proclaimed its commitment to following WTO rules, but today's announcement shows they do so only when convenient to them."

Washington could still choose to hike its 15 per cent tariffs on Airbus planes, raise tariffs on products such as EU cheese, olives and whisky, or impose tariffs on other products. It argues there is no legal basis for EU measures because underlying subsidies to Boeing have been repealed.

Brussels says only the WTO can determine whether members have complied with its rulings.

"We have made clear at every stage that we want to settle this long-running issue," EU Trade Commissioner Valdis Dombrovskis.Credit: Getty

Boeing called the EU decision "disappointing and surprising," and urged Airbus and Brussels to work to resolve the trade dispute.

'Great expectations' for Biden

German Economy Minister Peter Altmaier told the news conference that many EU countries saw Biden's election victory as a chance for an improvement in ties.

"We will try to get a new start in trade policy between the United States and all member states," said Altmaier, whose country holds the rotating EU presidency. He said Europe's goal was to find common ground with the future Biden administration and then reduce overall tariffs as much as possible.

The European Union and most EU states have congratulated Biden on his election victory. Trump, with whom Europe has had strained relations, is pursuing legal challenges to the outcome while making unfounded claims of fraud.

Dombrovskis said the Commission, which coordinates trade policy for the 27 EU nations, had made some informal contacts with Biden's team, and there was a host of things to do, ranging from coordinating work to reform global trade rules to incorporating climate change goals into trade.

The EU tariffs come about a week before regulators are expected to clear the Boeing 737 MAX for service after a safety grounding of more than 19 months. Industry sources say the tariffs could hobble deliveries to key buyers such as Ireland's Ryanair, whose chief executive has called on Boeing to absorb the extra import duties.

A coalition of the US and European drinks industry said the tariffs would damage a sector already devastated by COVID-19 related closures.

Dombrovskis repeated an EU offer that the bloc was ready to suspend its measures at any time if the United States did the same, "whether under the current or the next administration."

USTR did not directly address that issue.

Reuters

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