Proposed U.S. tariffs in reaction to EU aircraft subsidies

   As the U.S. awaits a World Trade Organization arbitrator’s determination of any countermeasures the U.S. may impose on the EU in connection with a dispute over aircraft subsidies, the Office of the U.S. Trade Representative on Tuesday released a preliminary list of EU products marked for tariffs.
   USTR is undertaking a statutory process to identify EU products to which additional duties may be applied until the EU removes subsidies to aircraft manufacturer Airbus that the WTO has found to be unfair, USTR said.
   The agency is releasing the preliminary list for public comment and estimating the harm from EU subsidies as $11 billion in trade every year.
   “Once the WTO arbitrator issues its report on the value of countermeasures, USTR will announce a final product list covering a level of trade commensurate with the adverse effects determined to exist,” the announcement says.
   USTR is proposing for retaliation about 315 products from the entire EU and nine products from France, Germany, Spain or the United Kingdom, specifically. Among the products included in the EU-wide proposed retaliation list are agricultural products, apparel, ceramics, metals and kitchen goods.
   The WTO in May 2018 issued an appellate report stating the EU must end certain ongoing financial support for Airbus’ biggest passenger planes.
   The U.S. requested authorization from the WTO to impose countermeasures worth $11.2 billion per year, commensurate with adverse effects caused by EU subsidies. A WTO arbitrator is evaluating those claims after the EU challenged the estimate, and is expected to issue a decision this summer.
   “This case has been in litigation for 14 years, and the time has come for action. The [Trump] administration is preparing to respond immediately when the WTO issues its finding on the value of U.S. countermeasures,” U.S. Trade Representative Robert Lighthizer said in a statement. “Our ultimate goal is to reach an agreement with the EU to end all WTO-inconsistent subsidies to large civil aircraft. When the EU ends these harmful subsidies, the additional U.S. duties imposed in response can be lifted.”
   Terry Stewart, international trade attorney and managing partner of Stewart and Stewart law firm, said there’s nothing surprising or unusual about USTR’s release of the proposed retaliation list, as it is common for countries to issue such a notice at this stage of a WTO case.
   “This both lets them handle any internal domestic procedures and serves to alert its trading partner(s) of what retaliation could look like. That is all that the U.S. has done,” Stewart said via email. “While arbitrators usually find less retaliation is justified than what was sought, the U.S. will simply modify its list once the value of retaliation has been confirmed by the arbitrator.”
   An EU spokesperson on Tuesday noted the United States’ $11 billion retaliation list is based on U.S. internal estimates that the WTO hasn’t awarded.
   The spokesperson added that the EU will seek WTO authorization to retaliate against the U.S. in connection with the EU’s case against U.S. subsidies to Boeing. The WTO Appellate Body issued its decision on the case in March.
   “The [European] Commission is starting preparations so that the EU can promptly take action based on the arbitrator’s decision on retaliation rights in this case,” the EU spokesperson said. “The European Union remains open for discussion with the United States, provided these are without preconditions and aimed at a fair outcome.”