Last reviewed 3 October 2019

The United States could be about to impose tariffs on EU goods ranging from aircraft to cheese and olives as a result of a ruling by the World Trade Organisation (WTO) in the long-running dispute over subsidies for rival planemakers Airbus and Boeing.

Having agreed that certain Member States of the EU illegally subsidised Airbus, a WTO arbitrator has now announced the level of countermeasures the US may request as a result.

A statement from the Office of the United States Trade Representative (USTR) said that this amounted to the largest arbitration award in WTO history — $7.5 billion annually.

The Arbitrator calculated this amount — nearly twice the largest previous award — based on WTO findings that EU launch aid for Airbus is causing significant lost sales of Boeing large civil aircraft, as well as impeding exports of Boeing large aircraft to the EU, Australia, China, Korea, Singapore and UAE markets.

Under WTO rules, the Arbitrator’s decision is final and not subject to appeal.

The bulk of the tariffs will be applied to a range of imports from France, Germany, Spain, and the UK, the USTR said, as these are the countries responsible for the illegal subsidies.

Although the USTR has the authority to apply a 100% tariff on affected products, it has said that the tariff increases will be limited to 10% on large civil aircraft and 25% on agricultural and other products.

The US has the authority to increase the tariffs at any time, or change the products affected. It will begin imposing the tariffs from 18 October 2019 on a list of products which can be found here.

However, EU Trade Commissioner Cecilia Malmström has warned the US against taking precipitate action,

She said: “We remain of the view that even if the United States obtains authorisation from the WTO Dispute Settlement Body, opting for applying countermeasures now would be short-sighted and counterproductive. Both the EU and the US have been found at fault by the WTO dispute settlement system for continuing to provide certain unlawful subsidies to their aircraft manufacturers.”

In the parallel Boeing case, the EU is likely to be granted rights to impose countermeasures against the US later this year as a result of the latter’s continued failure to comply with WTO rules.

A preliminary list of US products to be considered for countermeasures was published last April (see EU consults on WTO dispute with the United States).